A STEP-BY-STEP GUIDE TO FINANCING YOUR HOME
Published by Authorify Publishing Copyright © 2019 Authorify Publishing
All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. DISCLAIMER AND/OR LEGAL NOTICES: While all attempts have been made to verify information provided in this publication, neither the Author nor the Publisher assumes any responsibility for errors, inaccuracies, or omissions. Any slights of people or organizations are unintentional. This publication is not intended for use as a source of legal or accounting advice. The Publisher wants to stress that the information contained herein may be subject to varying state and/ or local laws or regulations. The reader of this publication assumes responsibility for the use of these materials and information. Adherence to all applicable laws and regulations, including advertising and all other aspects of doing business in the United States or any other jurisdiction is the sole responsibility of the reader. The Author and publisher assume no responsibility or liability whatsoever on behalf of any reader of these materials. If your property is currently listed with a Realtor, please disregard this notice. It is not our intention to solicit the offerings of other brokers. Printed in the United States of America
Table Of Contents
How The Loan Process Works From A To Z 19
Good Lenders Follow A Proven Process To Close On Time Good Lenders Update You Throughout The Process
Good Lenders Can Close Difficult Loans 91
A Summary Of How I Can Make Your Business Easier & More Profitable
A Mortgage Terms Glossary
When I first ventured into the real estate industry years ago, I did so with the hopes of helping sellers like you avoid the headaches often associated with the home-selling process. In my years of experience, not only have I helped alleviate the stress of selling for numerous clients, but I’ve also accumulated years of knowledge to help them get more money for their homes in the least amount of time. I decided to share all of my expertise in one place with potential clients. And that’s why you’re receiving this book. I want to help you have the best possible home-selling experience. And by that, I mean I want you to 1. Get the most money possible for your home, 2. Sell in the least amount of time, and 3. Avoid the headaches most commonly associated with the home-selling process. Think of this book as my gift to you. It contains insider advice on the home-selling process to help you achieve your ultimate real estate goals, including: • Secret strategies to sell your home for more money • Marketing techniques employed by top agents • Advice on how to appeal to today’s buyers • And much, much more If, after reading through it, you want to hire me to help you sell your home, I’d be more than happy to meet with you to discuss a specific plan to sell your home. Happy reading!
AGENT was raised in CITY with X siblings. As a child, AGENT had aspirations of being a OCCUPATION. Never in a million years did he think he’d stumble into the real estate industry, but you can’t always predict where or when you’ll discover what you’re meant to do in life. AGENT was taught at a young age that if you want something in life, you have to work for it. So that’s what he did. And he worked hard. As the years went by, AGENT worked his way from FIRST JOB to LATER JOB, never wavering in his resolve to become the best version of himself with each career move. AGENT got into the real estate industry X years ago when STORY ABOUT HOW YOU GOT INTO REAL ESTATE/WHY. He set out to LIST ASPIRATIONS FROM WHEN YOU STARTED OUT IN REAL ESTATE. As his career advanced, AGENT found his stride working with NICHE MARKET/SPECIFIC MARKET AREA/TYPE. He’s an expert in LIST AREAS OF EXPERTISE/SKILLS THAT SET YOU APART FROM OTHER AGENTS.
Throughout his career, AGENT has earned numerous accolades, including:
• LIST ACCOMPLISHMENTS • LIST SALES STATS ix
• ANY OTHER IMPRESSIVE INFO YOU’D LIKE TO INCLUDE
AGENT aims to provide the highest level of service to his clients and takes deep pride in helping them achieve their real estate goals. AGENT aims to provide the highest level of service to his clients and takes deep pride in helping them achieve their real estate goals.
Testimonials & Reviews for Agent Name
Here’s a list of people whom I have helped buy or sell a home, and what they said about working with me:
Agent-Name had a tough job, but she did it!
We were tough clients! We were moving to City and didn’t have a lot of time to look at houses, having to deal with our employer’s relocation, and all of the other challenges that came along. But, Agent-Name went above and beyond to help us. Even now, one year after the sale closed, I can still call her for business and service recommendations in the area — she knows just about everyone, and is very happy to help.
Agent-Name is the best agent in City!
I’ve used Agent-Name twice so far, and I was impressed both times. I bought my dream home with AGENT a year ago. She worked long and hard to find me the perfect home. And she just recently sold another property of mine. Everything went quickly and smoothly. Both of my real estate deals were done very quickly and professionally. Agent is honestly the BEST in her business. I would highly recommend her.
Agent-Name perseverance got me the house
My experience with Agent-Name during the entire home- buying process, from start to finish, has been nothing short of exceptional. I have a unique work structure, and because of this, it was very difficult to find mortgage lenders that would approve me for a home. I was very frustrated and on the verge of giving up, but Agent-Name insisted that we continue searching. Not only did we find a mortgage lender but also a mortgage that I felt great about. His perseverance is the reason I am now a homeowner. He is professional, punctual, knowledgeable, and very easy to work with. With the highest regard, I will recommend Agent-Name to all my friends and family.
Very attentive to concerns, details, and negotiations
Agent-Name helped me find a house by literally picking it out for me. Every house I wanted to go to, I got there and didn’t love it. Agent-Name was busy taking note of the likes and dislikes I was stating and said “I have a house that you’re going to love”.... AND I DID! I went back 4 or 5 times to show other members of my family, and she accommodated me without complaint. I was a first-time homebuyer, and she walked me through the steps of everything, gave me advice, and constantly followed up to make sure I was doing OK. With her help, I was able to close on the house early, right before I started my new job. I would recommend Agent-Name to EVERYONE, buying or selling. Agent-Name made it so so easy. She guided us through the entire process. She recommended great people to work with
every step of the way. She was available 24/7 to answer any questions we may have had. With her high standards, expertise in the industry, and patience, we would recommend her as a Realtor to anyone looking! She was amazing!
Agent-Name even advised me on how to prepare my house
Agent-Name was a gem. In addition to being highly knowledgeable about the real estate market, with many years of experience, he is a consummate professional. He was extremely easy to work with, gave me very good advice about preparing my house for sale and was very responsive during the entire process of receiving offers, selling and closing. I would work with him again in a heartbeat. He’s that good.
Agent-Name is the first agent I would call
Agent-Name and his team were able to rapidly list, show and sell my property. Being an expert in real estate, he was spot on in his pricing of my property and getting this deal completed. Overall, I highly recommend him and his team. If I want to buy real estate, AGENT would be the first person I’d call.
Agent-Name got us an offer in three days!
Agent-Name was the consummate professional during our stressful and difficult process. In the midst of juggling a ‘failed’ marketing effort with another agent, she presented a
well thought out plan and strategy to sell our home in short order. We needed to move quickly due to a growing family and another baby on the way. She helped alleviate that pressure by securing an acceptable offer with 3 days of listing. We put pressure on her, and she delivered. We couldn’t thank her enough.
Agent-Name kept us calm throughout the process!
Agent-Name always made herself available to answer questions. She worked hard to sell our home and find the best fit for our new home. She and her team worked with us through the entire process and kept us calm when we got anxious.
I am 100 percent satisfied!!
Agent-Name is professional and knowledgeable about everything. She is also always available. I would definitely recommend her to anyone. Very smooth transaction from start to finish. I felt confident with her experience.
Agent-Name found us our dream home
Agent-Name was very efficient and helped us find our dream home within a few short months. She was able to negotiate the price that we wanted for the house. Overall, I would look for her again to help us look for a house if need be in the future. Thank you so much!
Efficient communication and service
Agent-Name and his staff were very helpful in selling our condo. They kept me informed frequently with email, sending reports on showings, offers, and feedback from potential buyers. We are very satisfied.
Agent-Name will get your house sold fast!
Agent-Name is great and has the expertise to get your house sold. The communications throughout our sale (from beginning to end) has been outstanding. Agent-Name understands the stress involved in selling your house, and she updated our family consistently! This made us feel we were in good hands. I have worked with numerous agents, and I highly recommend her to represent you when it comes time to sell your home.
Excellent experience topped with a personal touch
Excellent experience all around, not only knowledgeable but Agent-Name and team have a very personal touch I felt like family throughout the entire process. He always took his time; we never felt rushed or like “just a number.” I sold my home and bought with him. We had lots of questions he gladly answered them with no problem and guided us through the entire process, eliminating lots of stress. I truly appreciate that and would recommend him and his team to family and friends.
CHAPTER 1 Introduction
Finding the right home is obviously one major component of homeownership, but that in no way means the process of getting that home is as simple as finding it. The reality is that searching for and buying a home involves an entire process that includes many steps and pieces that need to come together before you can declare the home “yours,” make the move, and settle in. If you’re wondering who I am and why you’re receiving this book, I’ll give you a little background. I’m a mortgage lender, and it’s my job to make sure you get the money you need to buy your house. Why am I giving you this book? As a home buyer, you have numerous options when it comes to getting approved for financing for your home purchase. You can apply for loans from any number of national or local lenders. So why should you choose to work with me? I have a direct working relationship with your real estate agent and a proven track record of getting buyers to the finish line of their home purchases. This chapter provides you with an overview of the entire home- buying process, including the home search, breaking it down into 10 basic steps that you should follow, along with your agent, to get things moving. Beyond that, in further chapters, I will go over everything you need to know about what I do for you and how I
close loans on time — hence, the title of the book.
Below is the 12-step checklist that will help make the whole process more rewarding and less anxiety-provoking. Searching for and purchasing a home is not for the faint of heart, but it is so very worth it!
THE 10 STEPS OF HOME BUYING:
• Find Out What You Can Afford • Get Pre-Approved for a Loan • Create a List of Needs vs. Wants • Look at Homes • Choose a Location • Choose Home Design
• Hire an Agent • Make an Offer • Put Money in Escrow • Negotiate with the Seller • Begin the Closing Process • Close the Closing Process
STEP 1: FIND OUT WHAT YOU CAN AFFORD
This first step is essential before you do anything else in the home-search and home-buying process. If you find out you can’t yet afford a home, or you aren’t ready to sell your home to get to your dream home, then wait until you can. There’s no point in getting your hopes up, stumbling upon the house of your dreams, and finding out you can’t afford it. You have to work within your price range, and not only use that as a general guide, but also as
your starting point in going forward.
So, know your budget! Don’t just think about the overall home sale price; consider the down payment, the monthly mortgage payments, property taxes, homeowners’ association fees, maintenance, and closing costs. Too many buyers — both first- time home buyers as well as second- and third-timers — make the mistake of not factoring in and accounting for all associated expenses in buying a home. For example, a home might seem affordable to you at first glance, but there are always “hidden” expenses involved, which, if you aren’t prepared for them, could lead you into financial problems. If you’re not sure where to start, try an online mortgage calculator, which will take various factors into consideration, including your monthly income. I would also be happy to give you a preliminary estimate on what you can afford. One tip is to make a detailed examination of the housing market to figure out your price range, as well as determine any issues you might have in meeting your basic needs. Do research on items like school districts, crime stats, impending construction, or anything that could increase or decrease the value of a home.
STEP 2: GET PRE-APPROVED FOR A LOAN
This is where I come in. Yes, you can get a loan from most financial institutions, but the majority of home buyers contact lenders for mortgage loans because the full cost of a home is generally not within the purview of the typical buyer’s assets.
Be careful here. Some banks are willing to lend larger loans than they know are reasonable, creating financial issues for buyers down the road. Even if you know your budget, and you know what’s affordable for you, you could get “tricked” by a bank or lender into thinking you can afford more than you can. Know your limits. Stay disciplined so you stay on track. Let’s say you’re counting on selling your home for X amount of dollars to serve as your down payment for your dream home that’s a bit out of your financial reach, and you don’t have extra in your savings account. What are you going to do if your home doesn’t sell for the amount you expected — or worse, if your home doesn’t sell at all, languishing on the market while you’re forced to pay two mortgages and can’t make ends meet? You have to be smart about this. While the process of buying a home, whether or not it’s your first, is a major emotional financial investment, you must maintain emotional control and make practical decisions based on your budget and situation. The best approach? Pre-approval by a proven, experienced, qualified, and reputable mortgage lender — like me — with whom you work closely and carefully to determine the appropriate budget for a mortgage loan.
STEP 3: CREATE A LIST OF NEEDS VS. WANTS
Essentially, you need to determine what is most important to you in a home — the non-negotiables — vs. what you’d like to have in a home — things you might need to let go of. In other words,
figure out what you need in your home (think number of bedrooms or bathrooms, yard, garage, basement, etc.) vs. what you want in your home (such as a fenced-in yard, gourmet kitchen, deck, walk-in closet). Then, write these items down when you’re shopping for a home. This will eliminate a lot of wasted time and energy looking at homes that don’t meet your criteria, and your budget, and will bring you that much closer to finding the right home for you. Keep in mind that no home is perfect. Be prepared to make some concessions, and remember that your ultimate dream home might be out of reach — for now. Nobody said that your first home has to be your last home!
STEP 4: LOOK AT HOMES
Now comes both the fun part as well as the tricky part — looking at homes. The fun part is searching and viewing online homes that meet both your budget and criteria, as well as visiting open houses, allowing you to figure out and see for yourself what is and isn’t the right home for you, and then finding it. You should make sure a thorough search is completed on all the available for-sale homes that fall within your price range and meet all the needs — and at least several of the wants — on the lists you wrote out in the third step. The tricky part? You need to examine each property’s condition so that you know exactly what it is you’re getting. Who knows what a seller or a listing agent is disclosing to you? Hire a qualified home inspector to inspect all aspects of the home, such
as structural and foundational issues, the yard, driveway, and walkway, the quality of water and plumbing systems as well as electrical work, water damage or mold, infestations requiring extermination, as well as doors and windows.
STEP 5: CHOOSE A LOCATION
Location, location, location! You probably hear that term in real estate a lot. This term can mean several different things, but here, I’m referring to the fact that one of the most important choices someone can make when determining which home to purchase is location. You’ll need to factor in the area of the city, the neighborhood, the school district, proximity to important amenities, the commute to work, crime statistics, noise, neighbors, parking, traffic, etc. There is plenty to consider when thinking about location. Don’t forget that every property has its own specifics related to water supply, sanitation, and market access, which can either increase or decrease the value of the property. Finally, really picture yourself and your family both inside the home and outside it, in the area. Can you see yourselves living there? Do you get a positive vibe, or a negative vibe? These are all things to consider when choosing a location.
STEP 6: CHOOSE A HOME DESIGN
When you’ve determined such items as price range, needs vs. wants, and location, don’t forget to add home design to the list.
I’m not talking about interior design or décor, which are all things that can be modified, upgraded, or even completely renovated in time. Rather, I’m talking about the type of home — such as a condo, a townhouse, a bungalow, a two-story home, etc., as well as big-ticket items like a garage, yard, basement (finished or unfinished), dining room, staircases, where the bathrooms are located in relation to the bedrooms, etc. In other words, how was the home architecturally designed? Perhaps you’re a first-time home buyer who’s single, and you’re looking for a condo in a multi-story building where you’ll meet plenty of people. Or perhaps you and your partner have outgrown your smaller starter home, and you need to upgrade to a larger home with three bedrooms in close proximity to a bathroom, and perhaps on a second story, with the kitchen and living room on the main floor. Design matters! You need to determine the right type of home design that meets your needs and those of your family, if applicable.
STEP 7: MAKE AN OFFER
Once you’ve found the home that you and your agent are sure is the one — it falls within your price range, it’s in the right area and neighborhood, it meets all your needs criteria and maybe most of your wants, it’s been thoroughly inspected and examined — it’s time to make an offer. This is the first step to actually purchasing a specific property.
“Making an offer” essentially means proposing a price to buy the
property, and depending on the seller, the listing agent, your own agent, and the current housing market, that proposal could be equal to, less than, or more than the asking price. Further, a “spoken deal” means nothing; many legal requirements and written documents, such as the Residential Purchase Agreement, are involved in officially making an offer on a home, and this is another area where you truly need the expertise of a good real estate agent. If you choose to work without an agent, especially if you’re a first- time home buyer, you put yourself at risk of making expensive mistakes, or even screwing up the entire deal. Further, keep in mind that real estate laws and requirements can vary from state to state and can change over time. Keep yourself abreast of all new home-buying and housing market information applicable to your area. For second- or third-time home buyers: Don’t assume that because you bought a home in Oregon two years ago that you know the rules or conditions in North Carolina. The process of actually drawing up an offer on a home in which you’re interested is a bit complicated. Here are a few basic things that are important to know about making an offer. The offer: • must conform to local regulations and standards; • must mention the amount being offered as well as the actual asking price; • must include any terms and conditions on the purchase; • must be drafted and signed; • must be forwarded to the seller through an agent (your buyer’s agent or the seller’s agent); • is not a binding sales contract;
• is the buyer’s offer on the house based on its current condition and according to the terms and conditions; • is subject to change if the seller doesn’t agree with your terms; • can be refused if the seller doesn’t accept the amount being offered; • becomes void if the seller makes any changes, and becomes a counteroffer, which you can accept, refuse, or change. In this last instance, which is actually quite common during this process, an offer turns into a counteroffer, which can turn into another counteroffer, and on it goes back and forth until both parties are satisfied, or until the buyer moves on and/or the seller refuses to accept the buyer’s deal. The offer doesn’t actually become a contract until all parties agree to all terms, conditions, and changes in writing.
So, now, what should be included in the drawn-up purchase offer? Here is a list of the most common items:
• Physical address of the property; • Legal description of the property; • Price and terms and conditions of the purchase; • Seller’s promise to give clear title to buyer; • Target closing date; • Earnest deposit associated with the offer, as well as method of deposit; • Disposition of earnest deposit if deal falls through or fails; • Plans for adjusting taxes, fuel, and water bills between buyer/seller;
• Who will pay for title insurance, land survey, home inspections, etc.; • The deed to be granted; • State-mandated legal requirements; • Attorney review of contract; • Any disclosures; • The time after which the offer will expire. Something else to consider is contingencies. Many offers are made contingent upon a factor or event that must be resolved before the offer moves forward. The two most common contingencies are financing and home inspections. For financing, the offer is made contingent on the first-time buyer receiving a sufficient mortgage loan from their bank, or for current homeowners, contingent upon the sale of their home. For home inspections, the offer is made contingent upon a satisfactory home inspection report.
STEP 8: PUT MONEY IN ESCROW
Part of the home-buying process involves putting money into escrow; the buyer is expected to put money into escrow in order to make the contract binding, which then helps the contract move through and toward closure. A lot of people, both buyers and sellers, are confused about what “escrow” is. Essentially, it refers to a time period, not a place. Escrow is the period between 1) the time an offer of purchase is made on a property; and 2) the time when that property’s title is officially transferred from seller to buyer — to the new owner. The escrow process is essential in cases in which the ownership
title will be changed.
The money put into escrow, or the initial deposit amount collected as part of escrow, is considered as “good faith” money or “earnest” money. This money is the payment amount that will follow the home purchase process. How much money are you, the buyer, supposed to put into escrow? This totally depends on the terms as stipulated in the offer of purchase. Still confused? The good news is that an escrow agent who specializes in this period and process should be involved. The agent serves as a third party who enjoys a neutral state between seller and buyer, and helps provide assurance to both parties. The agent is also heavily involved in the actual transaction to ensure the clauses of the offer will be met completely, accurately, and satisfactorily. Further, the escrow agent serves as the manager of the trust account that holds the funds that will cover the value of the transaction. You might be wondering how long the money that you will deposit remains “in escrow.” The money collected from the buyer is held in escrow until the seller completes his or her obligations, and transfers the title over to the buyer. After this transfer is authorized, verified, and completed, the payment is then remitted to the seller. The “good faith” or “earnest” money is used to cover some of the down payment, the purchase price, and the closing costs.
STEP 9: NEGOTIATE WITH THE SELLER
The negotiation process in real estate transactions is one of the key steps for both the buyer and the seller. While the seller and listing agent want to sell the home for the reasonably highest amount they can, the buyer and the buyer’s agent want to get the best deal that they can. It can feel like a competition, and this is where negotiations come into play. For many buyers, this is the toughest and most challenging aspect of purchasing a home, to the point of becoming exhausting. It’s especially difficult to navigate if you don’t have a good buyer’s agent who’s skilled in negotiation tactics. In fact, this is one of the biggest reasons that we recommend hiring a real estate agent — negotiation! But you should also learn negotiation skills yourself. There are strategies and tactics you can learn and do when you are involved in the home-buying process, and we will discuss these in greater length later in this book. However, we can offer a summary of this aspect in this step in this process for the purposes of this chapter. You need to plan ahead with your agent on how to make a winning negotiation strategy. For example, once you find the home that meets your needs and falls within your price range, and you intend to make an offer, you should review comparable sales in the area and compare these comps with the prospective house, which will aid in validating the asking price.
Be sure to research and look at at least a handful of properties that are similar to the one on which you have your eyes set. This
way, you can take the average price of all the applicable comparable homes, and mention it in your offer. I also recommend that you visit the homes you’re using as comps before deciding on a price for your offer. The conditions of these properties must be taken into consideration. For example, if your prospective home — the target home — has additional features that the comps don’t have, then you need to factor that in for the price quote. It doesn’t need to be a “secret” that you did some research on comparable homes. In fact, you should actually mention the comps during the negotiation. Why? It will give the seller and the listing agent the impression that you know your stuff. You did your due diligence by doing your homework ahead of time — research — and this will only strengthen your bargaining position. Hiding the fact that you studied comparable sales, or, worse, failing to do this all together, is a mistake that can weaken your bargaining position, mark you as vulnerable or a “target” to be taken advantage of, and cost you in the end. As discussed in Step 7, a purchase offer can evoke different responses from the seller. First, the seller might accept your offer as is. Second, the seller might counter the offer by demanding changes (making a counteroffer for your review). Third, the seller could reject your offer altogether, coming back with a totally different counter proposal. How does negotiation play into this? Essentially, knowing how to negotiate, and having a skilled buyer’s agent on your side, will get you the best deal possible. It will also help you to deal with the seller’s response (acceptance, counteroffer, or rejection)
strategically and effectively.
First, know the maximum amount that you are prepared to spend on this home. If you’ve persuaded the seller to come down from the original listing price (based on the comps date you’ve acquired and shared), but now the seller comes back with a counteroffer, you, with the guidance of your agent, will need to determine how much you want the home and how badly you want to go through with the deal. For example, if you persist with your offer price when there’s a high market demand, you risk losing the property to another buyer who’s willing to pay more. This is why it’s important to know your limits and to stick to them, as well as to know how badly you want a particular home. Another tip for negotiating is to set your emotions aside, no matter how tricky that could be. The process of buying a home, which includes negotiating, is a professional business transaction, so there is no room for personal sentiments. If the price that the seller demands is too high relative to the comparable value of the property, then you need to know when to walk out of the deal, regardless of how painful it might be.
STEP 10: THE CLOSING PROCESS
After the negotiating is over, and after an offer has been made and accepted, comes the closing process. First, what is the closing process? Essentially, it involves everything that’s needed to make the home sale and home purchase complete, legal, and finalized. It’s also referred to as settlement or escrow, and is highly automated and computerized. Although nearly pro forma (“done as a matter of form” or
“standard”), the closing process is meant to bring all the parties involved to the same platform.
Before the process of closing can begin, the buyer must inspect the property personally. Why? You have to check to make sure that absolutely nothing has changed regarding the property’s condition following the signing of the contract (purchase agreement). If something has changed, then you must notify your agent and go back to the drawing board. What’s all involved in the closing process? The closing process can seem confusing and complicated, particularly for first-time buyers, but when compared to other aspects of searching for a home and the home-buying process, it’s actually a brief component, essentially involving the completion of the transaction to which all parties have agreed, based on the contract. The main “goal” of the closing process is to transfer the title of the property from former homeowner (seller) to new homeowner (buyer). It includes the need for title insurance, since there could be errors, unreported claims, or other flaws in the review of the property’s ownership. All usual property transfer taxes must be paid during closing. Further, you need to settle all other claims, including closing costs, legal fees, and adjustments. The closing agent is the party who is responsible for drawing up and finalizing the documentation regarding the home loan. In the majority of cases, both the buyer and seller, along with their agents, are present in a professional office setting. They’re committed to the completion of all relevant and required
paperwork so the property can officially be transferred from seller to buyer — the buyer gets the keys to the home; the seller gets the payment. Then, it’s the closing agent’s responsibility to subtract the funds required to pay existing mortgages and other costs related to the transaction. The closing agent must also ensure the deeds, loan documents, and other papers are prepared, signed, and submitted to the offices that maintain property records. This seems like a lot, but there really is little work to be done by you, the buyer — provided you have hired your own agent (this is another reason it’s important to have an agent working on your side) — because closing agents take care of all the necessary documentation required by title companies, lawyers, and lenders. The final result of the closing process is that the buyer obtains the title to the property, the seller receives the payment, the agents receive their commissions, the lenders’ loans are fully documented in the public records, and the state government collects the taxes generated by the transaction. Everyone wins! But what if not everyone wins? Remember, it’s not over until it’s over — meaning the home isn’t yours until you close, and until the closing process is fully complete. When you finally get to the end of the closing process, and you start picturing yourself moving into and settling into your new home, nothing feels worse than the deal suddenly falling apart at the last moment. While this isn’t common, it still happens. How and why? Some of the reasons include a last-minute home
inspection gone awry, a low home appraisal, or failure on the buyer’s end to obtain financing.
However, it’s easy for buyers to avoid these potential pitfalls and ensure the deal goes through if they are aware and prepared, and if they’ve secured the services of a good agent to make sure all the bases are covered so you’re not left in such a disappointing and heartbreaking situation. First, the home inspection. If major physical damage is revealed during the home inspection, the deal could be called off. This shouldn’t be all that surprising, however. If a home is considered structurally unsound or unsafe to live in, then there’s a good chance the deal won’t move forward, and the purchase will fall through. Low home appraisals also occur, and can be deal breakers, just like a poor home inspection report or damage noticed. If your target home’s appraisal is low, the lender will not give you a home loan to purchase it. To avoid financing becoming an issue as a last-minute deal breaker, please ensure you have been pre-approved for a mortgage, and for the appropriate amount (if you work with me, I’ll make sure you are). You might be surprised at how many applications are rejected during the mortgage approval process. Wait to get your finances in order before you apply for a loan, and then wait again to be pre-approved before you go off searching for homes, finding the perfect one, making an offer, etc. — only to have the deal go through because you didn’t end up qualifying for the loan after you’ve gotten yourself emotionally invested in a
home you can’t have. Going through the entire process and finalizing everything with the seller and listing agent, but then faltering in the financing department, will stall or probably sink the deal, almost every time. Title insurance and even more home inspections should also be expected as part of the closing process. The lender will have to ensure the seller fully owns the house. Defaulters will not own the house fully. It’s important that you keep these potential pitfalls in mind before you get to the closing process. If something goes wrong, but appropriate contingencies are in place, the deal could still be saved. But better to be safe than sorry — so protect yourself and take the right steps to get you where you want to go.
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