Buying a home is such an exciting adventure. When your friends and family find out you’re thinking about buying a home, advice and stories abound. However, even with all of the stories, there are probably a few things you may not have heard.
I’m sharing this list to make sure you don’t end up saying things like:
- No one told me that!
- I sent everything on your list, why does this underwriter person want more?
- Conditions?? All I want is a home loan, why are you picking on me?
- This is a lot of work, I thought it was supposed to be fun!
First thing you need to know, is that it’s going to take time! Sometimes the home buying process can be over in a flash. Most times, however; it will take months. From credit improvement, to saving up money, to dealing with all of the moving parts, and finding that perfect home; buying a home is a big deal. Some days it may feel like things are moving so slowly you’ll never find the home you want to buy. Be patient. People buy homes and close deals every day. Your day will come, too.
When buying a home, you’re going to sign a lot of paperwork. You’ll feel like you’re signing thousands of pieces of paper before the closing table. Then you’ll sign another pile. It’s normal. Maybe start conditioning your hands now to get ready to wield that pen.
Your lender is going to look into all of your financial background. Having a lender look at what feels like every purchase decision you’ve ever made can be a little unnerving. It’s normal. Because a mortgage is such a huge commitment, your lender wants to make sure you’re ready and able. No one wants the situation to turn sideways later – that’s where late payments and foreclosure notices make things messy. Your lender doesn’t want that, any more than you do.
Make sure you document any major withdrawals or deposits in your bank account. A lender will investigate your financial story, your deposits and withdrawals. If a large deposit is a gift it can be used for your down payment, but a loan cannot.
Be careful about paying off all debt and closing accounts before making a mortgage application. Thin credit is sometimes more difficult to approve than bruised credit. A long and diverse credit history is typically better when applying for a mortgage.
Property taxes are likely to change at some point – affecting your monthly payment. Escrow payments are included in your monthly payment to pay your property taxes and home owners insurance. When these bills change, your house payment will change. It’s not a change in your interest or principal payment.
Do not give notice to your landlord until you have a firm closing date. Sometimes the home inspection turns up major repairs that will take time to be completed, or the appraisal comes in too low and the contract has to be renegotiated. Potential closing dates can be moved back for these and other reasons. You don’t want to end up homeless for a few weeks or having to move in with mom and dad!
Buying a home can be a lengthy process. It can be scary and seem overwhelming at times. It can also be exciting and fun. A good Realtor can help guide you through the process, making it less stressful and a lot less scary with few surprises. By working closely with your Realtor, you will be able to find the homes that fit your criteria as soon as they hit the market, and you’ll be ready and able to put in an offer right away.
By Bonnie Marlow, Realtor, Cisco Realty