May 27, 2008

Helpful advice if you're buying a home

The stupid things that home buyers, even those who have purchased one or more homes over decades, will do never cease to amaze me. So, let me give you some helpful hints that your broker will give you but that you'll ignore.

1) Don't go buy ANYTHING, even with cash, prior to closing.

You may not realize it but we can see when you go and look for a new car. That big screen TV you just got financed at Best Buy? We see that, too. Every time you add a payment to your monthly debt service, even if it's 'no interest, no payments for 12 months' we have to count it in your debt to income ratio. If that ratio is on the edge, even an additional $10 a month in debt payments can kick you from approve to decline. Wait until after your loan closes and funds to buy the new plasma and the giant pickup.

As for spending cash, your approval may hinge on your verified assets. Spend too much out of that savings and it's good bye new two story McMansion in Pflugerville.

Don't even get me started on what shopping for new credit will do to your credit score.

JUST WAIT TO BUY THE STUFF YOU WANT.

2) Don't plan to have the movers come an hour after your closing is scheduled to begin. You're just setting up for failure. And trust me, we think you're an idiot and don't really have a lot of sympathy for you. Especially if you've owned a house in the past.

3) If you're a Realtor... GIVE YOUR LOAN OFFICERS TIME TO GET THEIR WORK DONE. Do NOT call every five minutes and bother them, the broker or the processor. Things don't happen instantaneously. And don't even think of calling the underwriter, unless you want to see how long we'll make you wait. Seriously, be patient and remind your clients that we're lending them hundreds of thousands of dollars and there's a lot of paperwork that has to get pushed. We won't leave them (or you) to twist in the wind but when there's a delay, don't act like the world will come to an end. It never does. Also, that plane that everyone is getting on about an hour after the scheduled closing? It's an American flight. It's delayed as well. Yeah, we're calling your bluff.

4) Keep your checkstubs and W2's. Don't throw them away, then expect us to be able to approve you for credit. This isn't a little $5,000 credit card. WE'RE LENDING YOU MONEY TO BUY A HOUSE. Keep up with your income documentation so you can get it to us quickly.

The number one thing that delays an on time closing is not the underwriter being slow. Or the originator. It's usually the borrower taking their sweet time to get necessary documentation in. Do yourself a favor and bring it all with you at initial application. Your loan officer will thank you.

5) REALLY LOOK at what you're being offered. Banks really ARE more expensive than brokers and hidden behind that 'no closing cost' loan from the bank is some serious income from a higher interest rate. And usually, you're better off taking the fee deductions than the interest deductions on a higher interest rate over 30 years. If you want transparency, go to a broker.

Finally, if you have problems just shoot me an email. I do this for a living and can you tell you if you're being screwed.

Posted by mcblogger at May 27, 2008 11:56 AM

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