Here is What You May Have Forgotten the Last Time You Purchased a House

As a current homeowner, you have already gone through the home loan process. But depending upon how long ago that was, things could have changed quite a bit. Read on for a quick refresher on what to expect.

Patience

This is probably the most important thing you will need to retain throughout the process. Buying a home and getting the financing has many steps and involves multiple people. It is essential to enter into the process with the correct expectations. Know that not everything will go 100% as planned. It is similar to taking a trip on a plane. The pilot may come on the speaker and let you know there may be a little turbulence ahead. But since you expect it, you will not be surprised. The same is true for buying and financing a home.

The sellers may or may not be easy to work with. The underwriter will probably have lots of questions and will require more paperwork. Roll with the punches, do not stress, and you will be fine.

Paperwork

Speaking of paperwork, get ready to supply what is needed. And all documents must be easy to read and have every single page­—even if the page is blank. For example, if your bank statement has five pages, but the last page is blank, still supply it, or the underwriter will ask for it later. And when it comes to providing taxes, the easiest way is to ask your accountant to give you a PDF copy. The worst thing you can do is take a picture of each page with your phone and send it to your loan officer.

Verifications

After completing the loan application, the information will need to be verified. That includes your employment and assets. Make sure you have good contact information for your employers from the last two years so your lender can complete employment verification.

Along with your employment history, your lender will also verify your assets. It is important not to make any large untraceable deposits into your bank accounts during this process. For example, if you have a stash of cash under your mattress, that would be hard to trace and could hold up your loan.

Be Available

Word to the wise—do not go out of the country on an extended vacation. Do not take off on a trip where you do not have cell reception for days at a time. Being unavailable can stop your loan and it could possibly get denied if there are vital questions that you are not available to answer. So, be easy to contact by phone, text, and email throughout the process.

Protect your credit

When you apply for a mortgage, your lender will pull a credit report. The report will list your scores, open and closed accounts, and balances. Try to keep everything the same. Do not open or close any accounts. Do not let anyone else pull your credit. Do not run up more debts. Try to keep everything just like it was when you applied. That is because before your loan closes, the underwriter will have your credit pulled again. So, if you have gone out and bought a car, opened or closed accounts, or done anything that lowers your score, that could negatively impact your home loan.

Retain your assets

If you have $10,000 in the bank to cover closing costs and a down payment, make sure to set that money aside and do not use it. It is easy to get excited about moving into a new home. Try not to shop for appliances and furniture until after you move in. Before you close, the underwriter will want to make sure you have the funds you started with. Make sure to retain your assets until after the loan closes and you have the keys to your house.

Shopping

Just like we mentioned above, try not to go out and start shopping for furniture, appliances, window coverings, or fencing materials unless you have to and have the extra funds to do so. Wait until your loan closes and you have your keys in hand. Need a car? If possible, wait. But, before you incur any more debt or use the funds in your bank accounts, check with your loan officer first. Many times home loans have fallen out of escrow because the buyers leased or bought a new car, boat, or motorcycle.

Additional costs

Be aware of additional costs like Homeowners Association (HOA) dues or flood insurance. If your budget is tight and you are barely qualifying for a certain amount, adding HOA dues or flood insurance can put you over budget. Let your realtor know your budget and maximum payment amount. If there are any additional costs, talk to your loan officer to ensure you can still qualify.

Inspections

Once you find a home and you have put in an offer that is accepted, it is time for inspections. Even though most states do not require a home inspection, it is still a good idea to get one. However, do not expect the sellers to fix everything on the list. Home inspectors go through the house with a fine-tooth comb. You will get a multi-page report listing everything wrong with the house. Some items will need to be remedied immediately. Other things can wait. After that comes the appraisal.

Negotiations

With any purchase, there is usually some type of negotiation. If it is a buyer’s market, you will have a better chance of getting the seller to fix some items. In a seller’s market, do not expect that to happen. And if the appraisal comes in lower than your offer, it is back to the negotiation table. If it comes in higher, that is good for the buyer. Keep in mind that both the appraisal and home inspection are your reports, and you are not required to share them with the seller.

More paperwork

Just when you think you are close to the finish line, do not be surprised if you are asked for more paperwork. Maybe a document or page was illegible. Or, if you started this entire process months ago, you may need to supply updated paystubs and bank statements. Be willing and flexible, and everything will go more smoothly.

More questions

Think you are close to the end? Expect more questions from the underwriter. Anything that is not clear or if there is any missing data, the underwriter will ask about it. Expect this and supply the requested information. Doing that will reduce stress.

Time to Close

It is finally time to close and move into your new home. Although you have purchased a house or two before, every transaction has its challenges—pat yourself on the back for supplying everything needed and closing on your home loan.