Understanding The Home-Buying Process

Buying a home can be both an exciting and stressful process. Understanding the process, the players and terminology can help take the stress out of the experience and give you the confidence necessary to make the best decision for you and your family. Be patient and know once you have passed through each stage, you’re a little closer to being in you new home (that is if that’s what is best for you).

Prepare:

• You dream of buying a home
• You analyze your finances, decide how much you can afford and how much you will spend

Shop:

• You shop first for you mortgage options
• You shop for a home
• You select a home, make an offer and negotiate the price

Buy:

• The owner negotiates, you agree on a price, sign a sales contract and put up earnest money
• You obtain a mortgage
• You have the home inspected, obtain hazard insurance and prepare funds for closing. The lender and closing agents order the appraisal and title search
• The closing agent brings a clear title, deed and termite certificate. The owner brings keys for the home to the closing
• You bring the down payment, closing funds and insurance verification to the closing
• The attorney/lender/real estate professional coordinates the signing of documents and the transfer of money and ownership
• Ownership of the home is transferred to you at the closing
• You move your possessions into your new home

Care:

• You enjoy your new home and create a seasonal maintenance schedule

Understanding What A Lender Needs To Approve A Loan

Understanding what a lender needs in order to justify approval of a mortgage can be very helpful if you decide to purchase a home. The lender is looking mainly at five factors in evaluating your qualification for a home loan.

1. Cash or Capital Assets – The funds you have available for the down payment and the financial resources available after closing
2. Capacity – The continuing income for paying your monthly housing expenses and obligations
3. Credit – Your ability to manage debt and motivation to repay the mortgage
4. Collateral – Basically the house you are purchasing, which is the security for the loan (from the lenders perspective)
5. Characteristics – Other factors related to the transaction that could impact the risk of your loan

The first two factors involve your income: your yearly income and your monthly income. In deciding how well you can meet your monthly obligations, it is helpfull to make a distinction between periodic or onetime income (such as bonus or inheritance) and the steady money you count on each month for paying your bills.

The lender will ask questions such as those listed below and wil most likely ask to see supporting income.

What Do You Earn?

• Bring your most recent pay stubs
• Two years of W-2 statements
• Two years of federal tax returns

What Is Your Existing Debt?

• Bring loan statements and account numbers

What Potential Problems Could Keep You From Repaying The Mortgage?

• Bring a copy of your credit report, if you have one. The lender will order one anyway, but you want to see it before the lender, if possible, to clear up any problems.

My Family Is Driving Me Crazy!

How many times do you get upset with your co-workers, clients, family and friends? If only they understood the pressure you were under and would stop being so inconsiderate. If they could only walk a mile in your shoes!

Well Skippy, whenever I start thinking this way, I remind myself why I’m here. I’m here to serve others…it’s a reality to being successful in life and business. In fact, I think if we walked a mile in someone else’s shoes, our perspective would change dramatically.

“CLICK HERE”

 

Watch this video, it will help put some perspective back into your life and career.

Hat Tip: Chris Lengquist (thanks Chris)

Are You Thinking of Moving Up?

Whether you’re ready or not, as life changes, so do your housing needs. Families grow. Careers unfold. Lifestyles shift. One way or another, your circumstances change, and you may find yourself looking for a more comfortable home, one that’s in a new locale, or just a better place for your current living pattern.

Over the years with economic cycles and technology advances, the home financing process has changed, too. That’s why it’s critical you work with an individual that can make moving to your next home easier. With over 20 years mortgage experience and a lender with rock solid financial stability, my clients have access to a vast menu of home financing options, fast approval decisions, low down payment programs, and flexible rate, term, and closing cost options. Apply when and how it’s convenient for you – online, over the phone, or in person.

Financing a home is not a once-in-a-lifetime decision, and the financing package you used to buy your first home may not meet your needs the next time around. An experienced mortgage professional, will help you find a home financing solution that supports your current and future homeownership goals.

The majority of homeowners purchase multiple homes in their lifetimes. Each time you buy a home, you need to reevaluate your needs and goals. So whether you are trading in your first home for a larger one nearby, relocating for the tenth time, or looking to move to a new area for a lifestyle change, my team is here to help.

Pick your lender and Realtor responsibly!

Are You An Optimist, Realist or Stockdale?

In the book, Good to Great, the author Jim Collins states people fall into three different categories: 

1. The Optimist (bound to be eventually dispirited) 
2. The Realist (doom-sayer) 
3. The Stockdale Paradox

 What Is The Stockdale Paradox

 Stockdale Paradox individuals are those that retain faith they will prevail in the end, regardless of the difficulties AND at the same time “CONFRONTING” the most brutal facts of their current reality, whatever they may be.

The Stockdale Paradox is named after Admiral Jim Stockdale who was the highest ranking US military officer imprisoned in Vietnam. He was held in the “Hanoi Hilton” and repeatedly tortured over 8 years. Collins describes going to lunch with Stockdale (can you imagine?) and trying to understand how he survived 8 years as a POW while so many died after just months in captivity.

Here’s how Stockdale put it. “I never lost faith in the end of the story. I never doubted not only that I would get out, but also that I would prevail in the end and turn the experience into the defining event of my life, which, in retrospect, I would not trade.”

“Who didn’t make it out”?

“The optimists. They were the ones who said ‘we’re going to be out by Christmas’. And, Christmas would come and Christmas would go. Then they’d say, ‘We’re going to be out by Easter.’ And Easter would come, and Easter would go. And then Thanksgiving, and then it would be Christmas again. Then they died of a broken heart.”

So, on the one hand it was about unswerving faith that one will ultimately prevail while on the other hand it’s about banishing all false hopes? As usual, the guy who lived it says it best.

“You must never confuse faith that you will prevail in the end – which you can never afford to lose – with the discipline to confront the most brutal facts of your current reality, whatever they might be.” 

Holding those two seemingly contradictory notions in his head simultaneously was the key to Stockdale surviving, even thriving, in his experience. And, I believe, it is a perfect summary of the mindset one must have to originate and live life successfully. You have to believe your vision will come to pass while simultaneously doing everything you can to make it happen. Yet, you can never let your belief and faith cloud your confrontation with reality.

The optimists are the hedge fund managers and the New Century’s while the Realist are the individuals/companies that will survive, yet will always be average.

Whether you are a consumer, originator, company, etc…, it’s your choice to choose the category in which you will operate.

The Home Loan Process — Part 2 of Applying For Your Loan | Final Installment

This simple, four-step walk-through to loan closing will help you understand the procedure and give you an idea of what to expect.

1. Processing

When we initially meet, I will request and collect the information needed to process your loan. Documentation requirements vary depending on the loan program you apply for, as well as your individual financial and credit profiles. Subject to your overall profile and documentation, I will send you a commitment letter detailing any documentation requirements you’ll need to meet should your loan be approved. At the same time, one of my teammates will order an appraisal. At this point, you’ll have the option to lock in your interest rates or float it.

Items We Discuss Early In The Process

Floating The Rate: You’ve applied for your loan but you’ve also decided to wait before committing to an interest rate, perhaps because you think interest rates stand a chance of going down in the short-term. Your loan can stay in a float status up until 10 days before closing in most cases. During any float period, you can stay up to date on interest rate by signing up for the daily interest rate e-mail available on my Web site. It’s important to remember, NOT locking in is something of a calculated risk.

Locking In: You and your lender commit to a range of interest rates for a specified period of time – up to 180 days for new construction loans. During that period, your interest rate range is protected from increases. If you close your loan during that period, you get the rate range. If you go beyond the lock-in period without closing, you may have to work with the rate ranges available at that time. Locking in is something of a calculated risk.

There are also some reasons why a rate could change even during a lock-in period. For instance, a change in your credit profile could occur, you might decide to change your down payment, or you might change your mind on how many discount points you want to pay.

Whether you decide to lock or float, you’ll be taking a calculated risk. It’s a tough decision, and you’re the only one who can make it. Talk with your me to get an idea of what interest rates have been doing recently. You should also find out if there are any economic events coming up that could affect mortgage rates in the short term.

2. Title Insurance

There are two types of title insurance: one protects the lender, the other protects the borrower from claims against your ownership of the property. Such claims might be made by undisclosed spouses, heirs of previous owners, creditors holding liens against previous owners, or other parties. Your lender will most likely require you to purchase a title policy, which will cover their interest in the property.

It’s up to you if you would like to purchase a policy to protect your interest in the home. I will be able to recommend a title insurance company who can provide you with additional information about the policies available in your area.

3. Homeowners Insurance

As mentioned on other posts, most mortgage lenders require proof that you’ve purchased homeowners insurance at closing.

In the event of a loss such as a fire, tornado, or burglary, homeowners insurance can pay for damages to the home, as well as for costs to repair or replace contents. If you are unable to live in your home as a result of damages, homeowners insurance can cover additional living expenses for a period of time while your home is being repaired. Homeowners insurance can also protect you from loss if someone is injured or their personal belongings are damaged while on your property.

Your Insurance company will be required to provide proof of insurance in time for your closing.

4. Closing

At your closing, you’ll go through all the final steps of securing your new loan. The most important thing to know is that all closing costs must be paid in full at this time. Make sure you work closely with your attorney and any me to find out exactly how much you’ll have to pay at closing. At this juncture, I’ll work closely with you to make sure no last-second surprises affect your closing.

Information You’ll Need To Provide — Part 1 of Applying For Your Loan

Whether we meet face-to-face or talk on the phone my initial step will be to explain and walk you through the application process. It is a simple interview, and most of the information you’ll need can be taken straight from your credit report. The amount you’ll actually need to provide on your own isn’t overwhelming.

There are generally six areas that will be covered:

• Personal Data: Full names, addresses, and Social Security numbers of all borrowers.
• Income: The amount and sources of income for all borrowers.
• Assets: Information on all assets you’ll be using to qualify for the loan. This includes things like checking and savings accounts, stocks and bonds, retirement plans, and other real estate owned.
• Debt & Obligations: Information on all outstanding debt and other financial obligations.
• Credit References: Information concerning loans or debt that have been paid, plus any other references to good credit use.
• Property Information: Specifics on the property you wish to buy, if you’ve chosen one.