Great Advice for First Time Home Buyers

I love to read USA Today! It is my favorite newspaper!

I often get teased for reading it. My friend from MN -Pastor Jerry calls it USA Yesterday and Andy who works at my Starbucks teases me about buying it for the bright colors and Snapshots that are on the front page lower left corner.

Andy is more of a NY Times guy and I am sure that he is much smarter than me! ( I do love Andy’s sense of humor and I hope that he never changes how he treats me!)

Monday I did not feel at all well and I called in sick to work. I spent most of Monday asleep. Later Monday night I had to go get some milk for the kids and while at Albertsons I saw the April 26th edition of  USA Today with a front page headline about 5 tips for first time home buyers.

This excellent article by Stephanie Armour appeared in the Money section on page 3b. Currently as of early Tuesday morning 4/27/2010 you can see this article online at www.usatoday.com/MONEY/usaedition/2010-04-26-Homebuyers

I bought milk and  USA Today monday evening and I once read the article I liked what I saw. (I am so glad that we ran out of milk!)

I have been a mortgage professional working in the mortgage business for over 7 years, I have worked about 4 years as a retail Loan Officer (working for  both a bank and a mortgage broker) and I am in my fourth year working as an wholesale Account Executive (AE) for a nationwide wholesale mortgage lender. In 2009 I closed 998 loans.

Needless to say I have an abundance of experience working with people trying to buy thier first home and people who follow the advice in this article will save themselves quite a bit of pain and wasted time.

The five steps are listed in this order

#1 Get financials in order

#2 Find a Realtor and start looking.

#3 Investigate the reputation of builders, condos.

#4 Make an offer and apply for a mortgage.

#5 Prepare for closing.

In my professional opinion the part of the article that first time home buyers need to pay special attention to is found under Step #1 Get financials in order.

Under step #1 First time home buyers are encouraged to see a Loan Officer as part of step 1. That is so important!!! (Even if there is a catch to to seeing a Loan Officer)

The catch is that you need to see a quality Loan Officer who has experience, and who actually cares about their clients. Trust me, even today there are Loan Officers you would be better off not doing business with.

Painful problems often ensue when first time home buyers skip the important step of seeing a first rate Loan Officer up front at the beginning of the home buying process.

In my experience first time home buyers often start out in the home buying process by  contacting a Realtor. As long as the Realtor ensures that you have talked to a quality Loan Officer toward the beginning of the home buying process (i.e. before making an actual offer on a home) the whole process tends to work much better.

If you need help finding the “right” home to purchase for your family a Realtor can be extremely helpful, however in my experience Realtors are not qualified to help a first home buyer accurately determine if they can currently qualify to buy a home right now, and they are not generally qualified to to tell a first time home buyer  much of home they currently qualify for.

I cannot tell you how painful it is to be a Loan Officer and to sit with a young couple in their 20s who have been led by a realtor to make an offer on a home before seeing a mortgage professional and tell them that currently they do not qualify for that home. The look in the young wife’s eyes is enough to break your heart. Once a woman makes an offer on a home, in her heart that home is already hers and she knows where the Christmas tree is going to go. Don’t let that happen to your family.

That scenario happens more than you would want to believe. Just ask any experienced Loan Officer who has been in the mortgage business more than 2 years. Loan Officers see that situation often more often than they should.

It works so much better when a first time home buyer gathers their financials (a months worth of Paystubs, past two years tax returns, 2 years of W-2s or K-1s, and past three months worth of bank statements, all pages, even the blank ones!, and goes and sits down with a first rate Loan Officer, before they start looking for a home to buy.

A quality Loan Officer can help you determine if you can buy a home now, and how much of a home you can buy right now. They can help you with how much your total house payment will be including taxes and insurance. They can help determine how much of a down payment you will need.

Should you not be able to buy a home right now, a good Loan Officer will be able to give you a game plan spelling out exactly what steps you need to take so that you can buy a home in the next 12-24-36 months. The best Loan Officers will get your permission to check in with you every 3 months or so and see how you doing and ask if you need any assistance with preparing yourself to buy your first home. You can do it, it can happen, You just need the right team assisting you.

If you are a first time home buyer I hope that this info helps you with buying your first home!

If you are a Loan Officer please use this post to help educate any first time buyers you work with.

Steven

Please note: if you are a potential  home buyer or a Realtor and it not yet May 1st 2010, I give you a temporary pass to make an official offer on a home before you see a Loan Officer if you cannot get in to see one before making that offer . To qualify for the home buyers tax credit you need to execute an official offer by April 30th and close by June 30th. I will take this paragraph down Saturday night May 1st. 🙂

My other mortgage post is stevenshomler.com How to Find a Good Loan Officer

This entry was posted in Mortgage, Wholesale Lending and tagged , , , , , , , , . Bookmark the permalink.

2 Responses to Great Advice for First Time Home Buyers

  1. Jenny says:

    Great post!!! As a virtual real estate assistant, I have seen what you are talking about from the perspective of not choosing the right loan officer. Many times the buyer is unaware there is a problem with their loan until the week of closing! Best case, it delays the closing, worst case they lose the home and the escrow money.

    Any chance you could post something in the future on tips for finding the right loan officer? I.E. What questions to ask, what to look for, etc? And/or what signs would indicate a loan is in trouble? I.E. No FHA number, no contact from loan officer, not submitted to underwriting and it’s a week before closing, etc.

  2. This is excellent Steven, we really need this in our industry!!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s