You’ve got a home identified that you want to purchase,
you’ve negotiated a price, and executed a contract – what should you do
next? Well, you should actually take a
step backwards! The steps below will
highlight different steps when it comes to lending. Here’s the steps to expect:
1.
Shop Lenders – How much did your shoes cost that
you have on right now? Did you try them
on first? How about your pants? Your shirt?
So why aren’t you trying on different lenders to see which one fits for
you? This is WAY more expensive than
your pants. Do some comparing! Ask the lender to show you a “Fee Worksheet”
– it will have all of your costs broken out for you loan like a grocery
receipt. If they can’t provide you with a
Fee Worksheet it might be a clear sign of something! This will likely be the LARGEST PURCHASE you
make (next to your own home) even a small different can add up to a $30,000
difference at the end of the loan. Shop
and compare.
2.
Get PreQualified – What you don’t want to
have happen is you find a home and have to wait 60 days to be qualified and
you lose the deal and your earnest money because it took too long. That would stink. So get “PreQualified” or “PreApproved”
a.
PreQualified – you’ve spoken with the lender,
talked through your scenario, and they have checked your credit. Everything sounds good and they will issue
you a letter saying you can buy a home.
b.
PreApproved – you’ve spoken with the lender,
talked through your scenario, and all of your documentation has gone through
UNDERWRITING. This might take a few days
to go through underwriting but your qualification is much better. You know you are in a great position to close
your loan if you are PreApproved.
3.
Tell your Lender! – If you are using hard money
you will want to keep them informed the moment you find a home. The moment you have a contract executed then
please tell your lender! Give your lenders each others contact information. Your realtors too! Time is money. You want the work to be completed quickly so
you can flip it TOMORROW! Or if you are
buying and holding then tell that conventional lender so he/she can start the
refinance. Don’t wait until after the
work is completed. That means you’ll
have to wait longer to get out of the hard money. Keep your lenders informed.
4.
Appraisal this and Appraisal that – Did you know
your contract should have a clause in it that if the appraisal does not come
back as expected you can back out of the transaction? Your hard money lender will perform an
appraisal and so will your conventional lender.
If you are using both lending types then you will be receiving two
different appraisals. Expect it. The appraisals are there to protect you and
the lender from being overpriced by the seller.
5.
Closing – Hard Money lenders can close as soon as
title is cleared (about 10 days). A
conventional lender can close in about 30 days (depending on the lender). A refinance will be slightly longer (about 40
days).
The more work you do in the beginning the less work you will
need at the end. Buying a home is
stressful. Renovating a home is
stressful. Selling a home is stressful.
Mitigate your stress by doing these steps and know what to expect! Up Next:
PART 4: The Numbers!
Andrew Postell
Gateway Mortgage
817-873-0621
Andrew.postell@gatewayloan.com