My name is Shanne Sleder and I am a Mortgage Banker from San Diego, California and the author of SanDiegoMortgageNews.net. I would like to say hello to the visitors of AndrewArroyoRealEstate.com.
One of the great agents at Andrew Arroyo Real Estate, Nicole Mazzola, recently contributed to one of my all-time most popular posts on Home Buying Tips. Since that post was so well received, Nicole was kind enough to allow me to share some more detailed home buying tips. Without further adieu, let’s get to the tips!
Whether you are an experienced home buyer or a first time home buyer, the process can be one filled with stress and anxiety. Especially now that lending guidelines are tighter. I have put together 7 tips that can be extremely beneficial to you during the home buying process. Feel free to comment at the bottom which one you thought helped the most.
1) Ask Your Mortgage Broker To Touch Base With The Listing realtor – I can tell you that one of the most productive means to help a client to get their offer to purchase approved by a seller is to make one easy call to the listing realtor when an offer has been made. I contact the listing realtor to introduce myself and tell them about my client and that they are financially qualified to buy the home.
This is just a brief conversation and takes no more than a few minutes. As a broker, all I have to do is confirm with the realtor that a pre-approval letter has been forwarded and that getting the loan will be a relatively smooth process. This is vital as your client might be in competition with other cash offers. Should the agent indicate they are inclined to go with an all cash offer, it’s up to me to convince the agent that the loan transaction will be just as easy as a cash transaction.
Of all the tips you will read about in this article, this is the one that you want to keep in mind. Getting your lender to touch base with a listing agent is a step you won’t regret.
2) Check out the Home Periodically – Keep in mind that when you purchase a home you will be living there 24/7 throughout the year. A home buyer should take a look at the property at various times of the day and one or more times during the week to see if your opinion of it differs.
Ask yourself how it looks in the a.m., afternoon, and at night. Do you hear more traffic or other noise at different times during the day or night? Do you see any suspicious individuals at nighttime? Find out how difficult it might be driving home at rush hour or when the kids are getting out of school.
Knowing the answers to these questions can be important. Keep in mind that you will probably own this home for many years and it a huge financial investment. If you aren’t happy with the home, you can’t simply return it like a pair of slacks because your home comes with a no-return policy.
3) Keep On The Lookout For New Mortgage Products – Your particular financial situation may not necessarily be suitable for traditional loans such as through Fannie Mae and Freddy Mac, or the VA or FHA, but keep in mind that there are other loan programs which are new to the market.
If you find yourself challenged because of your qualifying ratio or credit issues such as if you are self-employed, there are other lenders out there who have new products which are more lenient when it comes to lending guidelines.
Several of the new programs which are now appearing in the market permit those who have a large amount of assets to be provided with an income calculation that will make it easier to qualify. You also can opt for a program for the self-employed which offers a “bank statement” loan. This is helpful if you have sufficient monthly cash flow in your bank account, but are unable to prove sufficient income from your tax return.
4) How To Research A Condominium Purchase– You will need to perform a lot more research if you’re thinking of buying a condominium than you would for a single family home. Buying a condo requires a much different mindset.
A condominium complex is a legal entity because it has an HOA, which is short for the Home Owner’s Association, and which regulates what occurs in the overall complex. This can have a significant impact on the value of the condo later on and your ability to sell in the future.
Begin your research by asking how the overall appearance of the complex looks to you. Does it seem well maintained? One of the most important first steps is to obtain the association’s financial records. If you find the association hasn’t performed well with establishing a reserve for repairs then avoid this particular complex. Another red flag to note is whether other condo owners in the complex are behind on their condo dues. If many are, you should be very cautious about purchasing in that complex. If the non owner occupancy rate is greater than 50% you might also be cautious because renters may not keep up the appearance of the complex.
Keep an open mind about these other available programs.
5) Be Ready to Have Your File Scrutinized – Getting a loan in today’s lending environment is not the same as it was 5 years ago. Lenders require more documentation to prove income and your available assets. They are going to want to see pay stubs, W2’s and potentially 2 years of tax returns.
On your assets, expect to provide 2 months of statements for each account. They must be complete statements with no alterations. Many clients try to provide only a few pages or blacken out account numbers. This will not be acceptable to an underwriter.
In addition to having to provide all these documents, be ready to write letters of explanations for anything that may look unusual to an underwriter or for any large deposits that show on your statements. The underwriter will want to see proof of where those deposits came from, so you will need to provide copies of checks or money transfers.
Many people feel that the current process of getting a loan is too invasive of their personal information. If you are aware of this early and can prepare yourself it may make it easier to handle when it happens. As a lender, I try to only get what I believe an underwriter will need, but we also want to make sure we get everything we can to get your loan approved and quickly.
6) Research The Records For The Home – Don’t be fooled by how the home appears or how they have staged the house for appearance. You need to check out the history of the home especially the property disclosure. You want to know about the number of previous owners and whether they completed any additions. If they made additions you want to ensure they had the proper permits and that the work was done up to code. This is vital for 3 reasons.
First, it might affect your ability to be approved for a loan. If you’re considering buying a 3,000 sq ft home, but the records only indicate 2,000, the lender will use the value based on the smaller sq ft amount unless the add-on had the proper permits. Otherwise, this will impact your loan to value as the smaller square footage will decrease the overall value compared to the price for which it is selling. The loan could be declined altogether especially if the work performed is not up to code or a potential hazard.
Second, if the new addition did not have the required permits you won’t know if they were done correctly or if you might have problems later on. The biggest issues resolve around both electrical and the plumbing.
Lastly, your ability to sell the home later on can be impacted by this situation. A prospective buyer might not accept that the addition work didn’t have the proper permits and it could result in you having to spend thousands of dollars to bring the home up code when you put the home out on the market.
7) Be Very Cautious About Buying the Most Expensive Home in the Area – I’ve had this issue occur a number of times over my career. The client has performed a lot of remodeling and work on the landscaping so it appears as the best house on the block and far outshines surrounding homes.
The problem with this type of home is that if you go to sell it or obtain new refinancing, it’s tough to establish the true worth of the home simply because there are no other similar homes to make a value comparison. To provide proof of the value on such a home, appraisers must be able to use other homes to make a comparison. If that isn’t the case for your area where other homes have received similar upgrades or are smaller in size it will be tough to get the value that you believe should be shown for the house.
Should you be seriously looking at purchasing this type of home, it could become a serious problem when you try to sell it later on.
If you would like to see more simple Home Buying Tips from a group of 50 Real Estate experts please check out: Home Buying Tips