November 12, 2021
Although the home buying process has many steps, it only has a few key players. Who’s on your team has a significant impact on the speed of the home buying process and whether your experience is good or bad. In addition to who’s on your team, your preparedness is key. When you come into the process organized and with correct expectations, you’ll have a much better chance of success. Read on for our top tips for speeding up the buying process.
Estimating the Home Process Timeline
Depending on who you talk to, the home buying process can take between three to six months. Of course, it varies depending on whether it’s a buyers’ or a seller’s market and the location you’re buying in. But there are specific ways you can make your journey to buying a home as quick as possible.
Work with an Excellent Lender
One of the most significant parts of the home buying process is financing. If you can’t get the financing, or if you can’t get it in time, you won’t be able to buy the home you want.
When shopping for a lender, keep rate shopping in perspective. You’ll not only want to get the best possible rate, but you’ll also want to make sure the customer service is good. Having a low quoted rate is a moot point if the lender can’t close on time. So, balance the two – low rate and customer service.
Have Correct Expectations
Be realistic about how much documentation you’ll need to supply. If you’re a first-time homebuyer, or if you haven’t bought a home for several years – you may be surprised by the amount of information you need to supply. Ever since the real estate crash of 2008, where so many homes were foreclosed on, lending has tightened up. Every aspect of a borrower’s income, credit profile, and assets is reviewed with a fine-tooth comb.
At first, you’ll submit the main documents needed. Once your file goes to the underwriter, they will likely have questions and require more documentation. Be flexible. Know you’ll probably be providing information and documents up until the day of the close. And sometimes, you might have to submit the data more than once. Just give your lender whatever is needed right away, and you’ll be fine.
Consider the loan process like a cross-country flight from California to Florida. At the beginning of the flight, your pilot will tell you the weather and your estimated arrival time. They will most likely tell you there could be some turbulence as you go over mountain ranges and approach Florida. That way, when there’s turbulence, you’re not surprised. When those bumps happen – you say to yourself, “this is normal, don’t stress.” Your plane lands, and when you leave the plane, you tell your pilot they did a great job!
The same is true for getting a mortgage loan. It’s not uncommon for there to be a few bumps along the way. So – don’t get nervous. Every loan is different, but in most cases, the underwriter has questions they’ll need clarification on. Some loans have issues not with the borrower but with the property. For example – maybe the appraisal came in low, or the roof won’t last another year. The best thing to do is not to expect a completely smooth ride. There are many moving pieces to a loan, and most have some issues that need to be addressed along the way. That’s why it’s imperative to have a lender you can trust to get you to close.
Have Your List of Needed Documents
As soon as you apply for a mortgage, your loan officer will give you a list of documents they need. Here are some of the most commonly requested items for income:
- W2 – last two years
- Paystub – two most recent
- Taxes – last two years taxes personal and business
- Year to date profit and loss
- Social security awards letter
- Pension awards letter
You’ll also need to show your assets.
- Checking and savings accounts – most recent two months
- Retirement accounts – most recent two months
If you receive some or all of the down payment as a gift, you’ll need a gift letter. There are probably other documents you’ll need. Your loan officer will let you know what they are.
Get Your Financial Documents Organized
Once you start the home buying process, get your documents together. You’ll want to create two folders. One on your computer and one hard copy folder.
Computer folder – save it where you’ll be able to find it easily. Put all of your documents in this folder, and carefully save each form, so you’ll know what it is without having to open it. For example:
- Paystub June-1-2021
- Paystub June-7-2021
- Checking May-2021
- Checking April-2021
- Social Security Awards Letter-2021
- Personal taxes-2020
- Business taxes-2020
- P & L Jan – May-2021
When you take the time to save your documents in this format, if you need to resubmit anything, it’s easy to find. Many of your documents will already be PDFs—for example, your bank statements. But if you’re self-employed, you’ll need to scan your taxes to upload to your lender. That is unless you take them into their office.
Hard copies – consider keeping paperwork close at hand. Especially if you are self-employed and need to submit your taxes. And whatever you do – don’t pack them before your loan closes and you have the keys to your house! If you need them at the last minute, you don’t want to be looking through boxes on a moving truck.
Have Your Down Payment & Closing Costs Funds Ready
For almost every type of mortgage, you’ll need a down payment. Here’s how much of the purchase price you should save:
If you’re getting a gift from a relative, employer, or close friend, you’ll also need a gift letter. Your loan officer can help you with that.
In addition to the down payment, you’ll also need closing costs that run between 2-5% of the property's purchase price.
You may need to provide your tax returns. If you’re self-employed, have them filed and ready to submit. You’ll need to either upload them or bring them to your lender. If you’re scanning and uploading, make sure you scan every page – even the blank ones.
Once you’re done scanning, keep your returns together and close at hand in case they’re needed again.
Avoid These Common Pitfalls
All during the home buying process and especially once you’re in escrow, it’s important to maintain your financial position and avoid mistakes. That’s because you’ve been prequalified based on your credit report, amount of debt, number of credit accounts, and money in your bank accounts. Applying for more credit or increasing the amount you own could mean you won’t qualify. So that means:
- No charging new furniture, TVs, drapes, blinds, etc.
- No buying and getting a loan for new vehicles
- No buying and getting a loan for new boats or ATVs
- Don’t have your credit pulled by anyone else
- Don’t drain your savings either. Wait until you have the keys to your new place, then you can do whatever you want.
In addition to keeping your credit and financial information the same, here are a few more tips.
- Don’t change jobs while you’re in escrow
- Don’t reduce or vary your hours while you’re in escrow
Have Realistic Market Expectations
Just as getting your financing in place is important, it’s also imperative to have realistic expectations regarding the market. For example, if you’re buying in an extremely competitive market, don’t ask your realtor to put in a low offer. And if you find a home you’re interested in a hot market, be ready to put in an offer right away.
Additionally, do some homework on your own to save time. If there’s a property you’re interested in, you might do a quick drive-by to see if it’s an option before you have your agent ask to see the inside. Watch new listings on Zillow, Realtor.com, Redfin, and Trulia, and let your agent know if you find a possibility.
Find the Right Realtor for Your Needs
Almost as important as finding the right lender, is working with the best real estate agent for your situation. Here are some things to look for:
When you’re looking for a real estate agent, one crucial factor is agent availability. That’s very important in a seller’s market where bidding wars are the norm. Think before you commit to someone part-time that is hard to reach.
Working with a realtor who has direct experience or a new agent with a hands-on broker is vital in any market. For example, in a buyers’ market, you’ll need someone who can negotiate the best offer and getting as many needed repairs done and paid by the seller as possible.
In a seller’s market, your agent needs to show how your offer is superior to other buyers.
Knowledge & Familiarity
No matter what areas you’re shopping in, try and find an agent specializing in those locations. For example, if you’re looking at a gated community – work with a realtor who knows the different neighborhoods and can guide you towards the best valued properties.
Works Well with Others
Having a good realtor means they can keep the purchase moving along. For example, once the appraisal comes back, if it's low[SU1] [C2] , negotiations will need to occur. Or after the home inspections are done, who pays for any repairs will need to be decided. Being able to keep everything moving along regardless of what comes up is the mark of a professional.
Sometimes realtors have specific lenders they like to work with. And lenders can have their favorite realtors too. But as the borrower, it’s essential that you select the lender and the real estate agent that fits your needs the best. Once you choose your team, introduce them to each other. Selecting the best team possible will make your entire home buying process a success. Good luck in your homebuying journey!
To learn more about PenFed loans or what loan is right for you: