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As we say in Boy Scouts ---- BE PREPARED!!!
Skip Pre-qualification and lets get right to a written Pre-approval. Our preferred lenders will perform an extensive check of your finances including your credit rating, whether or not you’re a first-time buyer, what your debt load is, how much money you have to put as a down payment, etc. This figure will be a much more reliable estimate of what you can afford.
In KY, pre-approved buyers are preferred over those that are merely pre-qualified. Being pre-approved lets the seller know you have gone through an extensive financial background check and there should be no unexpected obstacles to you buying their home. It also puts you in the BEST NEGOTIATING POSITION possible.
Your agent should provide you with a blank contract to review prior to making an offer so nothing is a surprise or if you have questions.
if you are married or two people are buying the home you both need to agree on these two lists.
Using these lists we can narrow your options in the current market to about 10 houses. If you look at too many homes on the web or in person they will begin to run together, trust me on this, keep the number of homes to a minimum.
At the time of this writing we are in the strongest sellers market of our lifetime in the Greater Louisville area market.
Be Ready to leave work at lunch or for an hour if the right home hits the market. Prepare your employer (if possible) to step out occasionally. Also prepare to see homes in the evening, daytime is better for seeing everything but sometimes it just can't be avoided in the evening. Remember, YOUR REALTOR has a family too and we help more than one client at a time.
standard offer- no competing offers
There are many ways to get information we can use to negotiate for you. If you find the one, and there are not 5 other people wanting the same house. Look up the address on Google, you will find the first 3 pages will be other Realtors tagging showing the MLS info so skip to good content. Use terms such as "fire" "damage" "theft" etc to see if there are any underlying issues not disclosed by the seller. When you view the house, use your intuition, your gut feeling, what ever you want to call it.
Multiple offer situation---Competing buyers
You need to inspect the property. Even New construction has issues. We will provide a list of licensed home inspectors we have used in the past and have found them to be informative. We prefer home inspectors to be helpful not ones who scare the buyer. Every house has flaws and characteristics that need maintenance in the future.
You may not get a new roof because it has a tab missing or a few nail pops. Be reasonable.
Normally we will draft a "request for repairs, corrections or replacements" using the home inspection. The rule of thumb is....Is it broken, dangerous, or missing? If not indicated on the seller disclosure you previously signed with the offer, we can ask the seller to repair, correct, or replace the item.
If you are paying "non broken house price" you should get a "non-broken house" at closing. Sometimes this is not the case. If you are 100% set on a location knowing the house needs updates or repairs you get what you are paying for. Just make sure it is safe.
This is typically the longest period of the entire process.
If your Loan officer asks for documents get them quickly. Delays during this time are critical.
You appraisal is also ordered during this time. Lets talk briefly on appraisals.
The appraiser may just drive by the house or they make go in. Depends on several factors. Your Realtor or Loan DOES NOT choose the appraiser. It is a random order selection legislated by the federal government.
Many times the number comes in the same as the purchase price, don't be alarmed. An appraisal is an opinion of value ordered by the lender to support the purchase price with a licensed professional, not just the REALTOR or buyer. They want an outside opinion not party to the contract. If you ordered 10 appraisals on the same house they would all be different but very close.
You will reserve the right to see the house prior to closing. This will cover a number of things.
The day has come, take your Government issued ID and CERTIFIED funds to the closing. You will get the required exact number at least 3 days prior to the closing as of October 2015.
Top 10 Credit Don’ts During The Loan Process
Don’t Do Anything That Will Cause A Red Flag To Be Raised By The Scoring System. This may include adding new accounts, co-signing on a loan, changing your name or address with the bureaus. Generally, the less new activity on your reports during the loan process, the better.
Don’t Apply For New Credit Of Any Kind. Including those “You have been pre-approved “credit card invitations that you receive in the mail or online. Every time that you have your credit pulled by a potential creditor you could lose points from your credit score. Depending on the elements in your current credit report, you could lose anywhere from one to twenty points for one hard inquiry. For lender inquiries as of Jan. 2007, any indicial inquiries count as one incident through a duration of 45 days.
Don’t Pay Off Collections Or Charge Offs During The Loan Process. Unless you can negotiate a delete letter, paying collections will usually decrease your credit score immediately due to the date of last activity becoming recent. If you want to pay off old accounts, consider doing it through escrow at closing.
Don’t Max Out Or Over Charge Your Credit Card Accounts. This is typically the fastest way to bring credit scores down 50-100 points. Try keeping your credit card balances below 30% of their available limit at all times during the loan process. If you decide to pay down balances, consider doing it across the board - meaning, pay balances to bring your balance to limit ratio to the same level on each card (i.e. all 30% of the limit, or all 40% etc.)
Don’t Consolidate Your Debt Into One Or Two Credit Cards. It seems like this would be the smart thing to do; however, when you consolidate all of your debt into one credit card, it may appear that you are maxed out on that card and the system will penalize you as mentioned in above item #4. If you want to save money on credit card interest rates, consider waiting until after closing.
Don’t Close Credit Card Accounts. If you close a credit card account, you may lose available credit and it might appear to the FICO that your debt ratio has gone up. Also, closing a card may affect other factors in the score such as length of credit history. If you have to close a credit card account, think about doing it after closing.
Don’t Pay Late. Stay current on existing accounts. Under the new FICO scoring models, one 30-day late could cost you anywhere from 50-100 points. Points lost for late pays may take several months if not years to recover.
Don’t Allow Any Accounts To Run Past Due—Even 1 Day! Most cards offer a grace period; however, what they may not tell you is that once the due date passes, that account could show up past due on your credit report. Past due balances can also drop scores by 50+ points.
Don’t Dispute Anything On Your Credit Report Once The Loan Process Is Started. When you send a letter of dispute to the credit report agencies a note is added to your credit report. In many cases when an underwriter notices a dispute they may not process the loan until the dispute is removed.
10. Don’t Lose Contact With Your Mortgage And Real Estate Professionals. If you have a question or not if you should take a specific action that you believe may affect your credit reports or scores during the loan process, your mortgage or real estate professional may be able to supply you with the resources you need to avoid making mistakes that could drop your credit score or affect your loan.