Happy Leap Day!
I know I'm supposed to post these for Money Mondays, but computer issues have kept me from doing so - but hey, better late than never right? Right. Let's go!
How to be a Serious Home Buyer...by Austin the Realtor
So…you wake up one morning and decide you are tired of renting and you want to own your own home. You go to your computer and search homes. You find some you love and call to make appointments. You do this for 3 months and finally fall in love with your dream home. You contact your bank and guess what? You are not approved for the amount of the home! You just wasted 3 months!
The above is a typical approach to home buying, but it’s the WRONG approach. Would you go grocery shopping without knowing how much money you have to spend? Probably not. Many believe that they "have good credit” and this is enough to qualify for a loan. Just like any other venture, you must do your research.
Get pre-approved! This serves multiple purposes. It lets you know what the bank will lend you and you know what price range to shop in. You can also determine an estimate of your monthly payments and determine if these payments are in your budget. I like to advise buyers to do what I call a “reverse pre-approval.” This means after you get your pre-approval from the bank, determine the monthly payment you are comfortable with and ask the bank what that payment equates to as a purchase price. This is your limit. Start your search here. Pre-approvals also let sellers know you are a serious home buyer and will be more willing to negotiate with you. Some sellers will not even take the time to show a home unless the buyer is “qualified”.
Next - happy house hunting.
Once you find a home you are interested in, determine an offer you would be willing to pay for the home and present it to the homeowner. If accepted, stop there. Schedule an Inspection. An engineer may find things you cannot see with the naked eye. (i.e. bad plumbing, termite infestation, rotting wood, poor foundation). Once you receive your engineer's report, discuss with your attorney and determine if the property is still worth purchasing. You may want to reconsider your offer if major work needs to be done.
Once you are satisfied and contracts are signed, begin the loan process. Since you are pre-approved, you should be comfortable that your loan application will go through. If you left out important financial information that can be a detriment to you, this will surface during the underwriting process and may cause your application to be denied. In other words, be honest!
Good Luck!
-Austin
www.austintherealtor.com
FIRST BITCHES
ReplyDeleteThis soo screwed me up... Today should have been a Leap Day post. LMFAO.
ReplyDeleteWhat is a Leap Day post? :-)
ReplyDeleteThis was a great post! Very informative. I didn't know some of this stuff.
ReplyDeleteNow I just have to save my money because banks don't do 100% financing anymore do they?
Good points.
ReplyDeleteI'll add one more: be VERY aware of loans without fixed rates. A slight .25% increase could easily mean you can't afford the payments anymore and you'd lose ALL you've put into it. Personally, I'd never take an adjustable rate mortgage. Keep in mind that the first several YEARS of monthly payment only pays the interest, not the principal.
100% financing is virtually undeard of unless you have a VA loan. Similiarly, stated income is gone. This is when very few documents were needed to verify income and funds.
ReplyDeleteGood point V. An ARM should only be used for the savvy. I personally did an interest only on a mortgage but I was flipping a property and did not intend to hold it more than 6-8 months so I minimzed my monthly payment as musch as possible. This is never advised if you intend on making this your primary residence.
Happy Leap Day..so its called!
We needed a post informing everyone why we have leap years (you would be surprised at how many people don't know why)
ReplyDeleteWhat today is called. (You'd be surprised at how many people didn't know it was called Leap Day)
And all the wackiness that people do today, traditions, etc... For Example I proposed to Powerz 4 years ago today! LOL
4 years later he outdid my proposal, married me & we have a bad a** 2 year old. LOL (not necessarily in that order)
For Anna :-)
ReplyDeleteFebruary 29 is a date that usually occurs every four years, and is called leap day. This day is added to the calendar in leap years as a corrective measure, because the earth does not orbit around the sun in precisely 365 days.
We may need to have a home buying WEEK of blogs. Between Austin and V, there's a wealth of knowledge to be shared. Perhaps have a guest each day from people with different sets of expertise? This is great - cuz I surely didn't know this stuff. Unfortunately we don't learn this stuff until we actually go thru it, and we make mistakes and it's too late. This post was very helpful.
ReplyDeleteThanks CG, funny thing is I just has a conversation with a potential homebuyer who insisted he did not need to get pre approved because he had good credit and he knew what he was doing........oh well
ReplyDeleteThis is awesome!
ReplyDeleteAbout how long is the closing process?
The closing process primarily depends on the time it takes to get your loan application processed. The offer, acceptance and contract signing can take about a week. The loan process including underwriting can take 6-10 weeks but it can take much longer if your paperwork in incomplete or if you are purchasing a distressed property (short sale or REO).
ReplyDeleteMy advice is to get all paperwork to your mortgage broker the first time. Avoid sending it in pieces and stay on top of them to ensure they are looking at your file.
What type of documents do they typically ask for?
ReplyDeleteAlso, is it possible to ask for more money if the home needs repairs?
@Courtney - bank statements, W2s and other docs to show income and proof of funds including credit checks
ReplyDeleteAlso, keep in mind your savings have to be "seasoned" which means it would have to be in your account for at least 2 months to used for your purchase. This assists in avoiding illegal funds being used for home purchases. AML laws.
If the bank deems the home uninhabitable, you can apply for a 203k loan to assist with repairs during your purchase.
I'm soooo late but I needed this when I bought my first home in Dallas. I made a lot of mistakes (big time)! Austin I'll chat with you off line about some questions. My goal is to buy a home in 2013 or 2014. But first I need to save!!!!
ReplyDeleteThese posts are sooooo helpful and I agree with Cable Guy, we should have a home buying week!
This is really informative as well as an interesting post to read that home buyers should know. Thanks for sharing!
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