For this week’s article, we’re taking a little bit of a different approach than what we had normally intended. Instead of presenting the weeks topic question to you all and writing based on the responses we would receive, we’ve decided it was important to address the number one most frequently asked question we hear whenever someone decides they’re ready to start their house hunt. To do this, we will be covering this topic over a 3 part series in the coming weeks. The question we will be answering is:
“Where do I start?”
or its not-so-distant cousin question,
“Now what?”
or a personal favorite,
“I have no idea what I’m doing.”
(admittedly, this is not a question, but addresses the same point)
So why do we feel that this is worth writing an entire 3 part series about? Because NO ONE TAUGHT US THIS IN SCHOOL! It makes a LOT of sense that the majority of people have no idea where to begin. It can seem overwhelming as a whole, but that is why we’re here. We want this generation to be educated with at least a baseline of knowing what to expect and what the first steps should be to set you up for success. That being said, let’s dive into the “now what” basics!
1. Speak to mortgage lenders
Well, technically FIRST would be to come and talk to one of us…THEN speak to mortgage lenders. It will always always ALWAYS be the first thing we direct you to do. If you don’t have one already we have multiple to recommend that we’ve both worked many transactions with whom we trust with all of our clients. Many home buyers don’t take the time to get pre-qualified or pre-approved. Oftentimes, they also don’t shop around to find the best mortgage lender for their particular situation. It’s important to ask plenty of questions and make sure you understand the home loan process completely. I reached out to one of our trusted lenders, David Graham, to weigh in on this and provide some valuable insight. We asked him what questions, in his professional opinion, you should be asking a lender when looking to select the right one for you. Here are some frequently asked questions and his answers:
Q: Will running my credit hurt my credit?
A: As long as you are not having it run several times then it should not hurt you at all, maybe 1 or 2 points on one of the bureaus, nothing that would make or break your approval.
Q: How much money down will I need?
A: Once we run [your credit] we will know what loan programs you qualify for and what the minimum down would be for each program and will show them an itemization with detailed closing costs. We have NO MONEY DOWN (VA, USDA) and as low as 3 and 3.5% down loans, etc.
Q: Should I wait until rates and values go down, and when there is more inventory?
A: This is a great question in this current market, but the answer will always be dictated by motivation to find a place to live and how strong their approval is. Renting is no walk in the park either right now, so buying now could truly the best move to make for many people. No one knows what the future holds for rates and the market, but a 5.5% rate today may look real good compared to the 7% in the future.
In addition to these, you should come prepared with the answers to questions the lender will have for YOU. This may come during your initial call or after, but it is important to have the information readily available in order for the lender to best support you in the financial aspect of this process. A few questions David Graham tends to ask are (but not limited to) the following:
- Current address where you live, date moved in, if you rent then rent per month (if less than two years provide past two year history)
- Employment – name of company, address, phone #, job title, full or part time, date started (if less than two years provide past two year work history)
- Gross income (before taxes taken out) – If you’re self-employed we will look at your last two tax returns to see what we can use for your income. We will also need to check on your pay stubs if there is bonus, commission, overtime, and things like that involved – this is very important!
- Amount of money that you expect to have for the purchase (family gift money can be included)
To end this point, and we cannot stress this enough, it is critical for your choice in realtor and lender to have a harmonious relationship to ensure the success of getting your offers accepted AND to the finish line. Communication and teamwork is KEY in making any real estate transaction happen smoothly.
As always, there are no problems, just solutions. We’re here to show you that #KellySellsPA and #januskygetsitdone.
And if you don’t know, now you know.
