So...You want to buy a house?
The Loan ProcessBy Sara W.Peterson
Sara works exclusively as a buyer's agent in Roseville, California and the surrounding area.
Early loan approval is one of the key elements to developing a strong negotiating position. Time is money to both you and the sellers, especially if the sellers have moved out already or need to move very quickly. Every day that the house remains vacant, the mortgage company continues to collect interest which can add up to a substantial amount of money for the sellers, on top of the costs of the new home they may be in now. We can use this to our advantage, perhaps offering a lower price in return for a quick sale and closing or seeking other concessions.
Just a note -- being pre-qualified is definitely not the same as being pre-approved. Only a cursory look at your financial situation is required to pre-qualify you and that generally only takes a few minutes, whereas pre-approval is jumping through all of the hoops that the lender has and then some with everything verified -- it takes longer. Your worst nightmare is attempting to buy a home based upon a pre-qualification and then discovering that you can't qualify for the loan you want or need.
By securing the loan before falling in love with a property, we have removed a good bit of the anxiety from the transaction. We'll be there every step of the way to hold your hand and trying to make the process go smoothly. You already know that you can buy what you are trying to buy when you are pre-approved. You are not wasting your time looking at houses that are either not attainable or do not meet your needs. You are concentrating on homes that are in your price range in the areas that you want to be in. And, with your loan already fully underwritten, there shouldn't be any of those attempts to get tons more paperwork out of you. We have already complied with most, if not all, of the investor's demands without the emotional strain of worrying about whether the house you want is really going to be yours.
The loan process itself is very intrusive. The are many very personal questions and documents that are required to satisfy the lender's requirements. There are various types of loans that are available which allow you to answer fewer questions and document less than what is requested for most mortgage loans. However, there is a price to be paid for this luxury and it consists of paying a higher interest rate than those people who take the time and fill out the more extensive paperwork requirements. Those people are rewarded with the lowest interest rates and best terms because the lender is better able to evaluate the risk involved in lending them money.
We will help guide you in selecting a mortgage package that best meets your financial needs. Every person's economic position is unique and with more than fifty different financing options available to you this part can easily be overwhelming without help. Remember, the Loan Officer or Mortgage Banker's job is to sell you a mortgage and obtain the best price for his company and investor. Our job is to shop for the best price and performance in a mortgage. Understanding what you are getting in return for your hard-earned money is as important with the loan as it is with your home.
If you have a home to sell, now is the time to put it on the market, actually the sooner, the better. The ideal situation is to have the closings within a one or two week period, giving you enough time to move and clean-up your old home and settle into the new one. This is easily achievable if your home goes on the market priced properly -- neither too high or too low. You will then receive one or more offers that you can negotiate and finally sign. Once the closing date for your existing house is set, you can then go about selecting your new home with confidence and a firm schedule in mind.
You don't have to sell your home first, however you will pay a price if you don't. Prospective sellers will give less consideration to any offer you might wish to make if the contract is contingent upon your selling a home first. They will sometimes accept the offer but keep their home on the market seeking a better offer. You're then left in the position of praying that your home sells before someone else comes to the seller with a non-contingent offer which, trust me -- they will take. When that happens you will be very disappointed and stressed. You can avoid this with a little patience -- sell your house first.
What happens if the timing is off? The buyers of your house want to move in quickly and the sellers of your new home can't move fast enough. A short term rental of an apartment is often the solution that gets you the home of your dreams. If you have pets and don't have a family member or friend that will help, a boarding kennel may be appropriate. Tons of furniture? Put the excess in a storage locker (make sure that you get insurance) until your new home is ready.
© 1996-1999 Sara W. Peterson, All Rights Reserved