So You Want To Buy A Home...

So You Want To Buy A Home

So you've thought about it, weighed your pros and cons and thought it's time to buy your first home. Where do you start?  Let me help.

First, let's talk about your finances.  Do you need to have a downpayment of 20% of the purchase price?  No, you can buy a home for as little as 3.5% and in some cases 0%.  It depends on your circumstances, such as your credit history if you qualify for a VA loan or not.  However, that talk will be between you and your lender.  I'm not a lender, I'm a real estate agent.  I just want you to know that there are options out there and it doesn't hurt to ask.  After a conversation with a lender, it may be that you'll have to wait a little longer, or you may find out you're good to go.  Even with 0% down, or 3.5% there are other fees you'll still have to come up with, so you'll still want a little nest egg in the bank.  The other fees, for example, are the appraiser, home inspection,  or any other inspection you chose.  Your lender can go over some of these other fees that will come out of pocket, not all of these are considered closing costs. 

The Prequal/Preapproval Letter

You hear about this and you say to yourself, my credit is good, I don't need to get one of these.  Most if not all agents will require this when the offer is submitted.  If you find the home of your dreams, then is not the time to get your paperwork ready.  You should already have your paperwork in order. Why?  Someone else will and you will watch the home of your dreams (or at least like a lot) slip away to another buyer.  Remember, time is of the essence.  Right now, October 2015, the market is a little weird, interest rates are low and so is the inventory.  What that means to you, more buyers not as many homes.  Can we say multiple offers on a home or bidding war?  Once again, now is not the time to start getting your paperwork together.  You should already have this, so you can jump when you need to.  Too many times I see instructions say, EMD, POF, POC and Preapproval Letter must be submitted with offer.  I even saw one instruction say, will not submit an offer without the preapproval letter no exceptions.  Yes, it's that serious.  

Preapproval is better than the Prequal. What's the difference?  APreapproval letter is usually generated after the lender has run your credit score and has received preliminary information provided by you.  The Prequal or Prequalification Letter is usually generated on verbal information provided by you.  Honestly, I was looking online and was able to get a Prequal letter without having to prove any of the information I gave.  Sweet right?  Nope, that's why many agents are asking for the Preapproval letter nowadays.  No one, and I mean no one wants to go through escrow and a week before closing, to find out that the buyer isn't qualified for a loan.  Emotions usually run high and it's just not pretty.  Depending on the situation, the buyer could end up losing the deposit.  Told you, it's just not pretty.  Yes, sometimes even with the preapproval stuff happens but less often.  

So when you prepare to meet your agent, remember to bring a copy of your letter for your agent. He/she will want to have a copy to be prepared to submit it with your offer when the time comes.

Until the next segment:  "I got the letter, now what?" 

-Karen

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