Want to Buy a Home? You Need to Obtain Financing.

You've probably seen the ads from REALTOR.com that tell you to get your pre-qualification before buying a home; that being pre-qualified gives you buying power. Well, listen up, because those ads are right!!

Depending on your situation, the type of financing you qualify for can determine the type of home you can purchase. Now on a scale of easiest to most hoops to jump through, this is my opinion of loan types. Paying cash is always going to be the easiest way to buy a home. Again this is in terms of hoops you have to jump through. Next in line is the Conventional loan. There are restrictions, and you'll need to bring more money as a down payment. But other than an appraisal there are usually fewer restrictions on the type of home you can buy and the number of hoops you have to jump through to get the approval. Next in line would be the FHA and VA loans. Both are government backed loans and require a more strict appraisal. While you need less money down to buy a home, the appraisal is more thorough and the seller could be required to make repairs so that you can buy the home. If the seller is unwilling to do that, you may need to find a different home. Finally, there are a group of loans such as USDA, Rural Development, NIFA and so forth. These loans will require more work on your part.

My advice to you as a buyer is know what type of loan you qualify for so that you know what type of home you can purchase. Even if you're really handy, and painting a house doesn't bother you, or you know you can fix windows with no problem, your lender may not allow you to fix the issues in order to buy the home. It's important to know your loan and know what your lender will and won't allow. If you have an FHA loan and you've fallen in love with a home that needs to be painted, you may need to rethink your home or your loan.

Why is the pre-qualification so important? Let me set this up from a seller's view. You've received an offer on your home. It has composite siding and original windows. The home's foundation has settled slightly and there are some minor cracks. The home was only built 15 years ago, but the shingles are showing their age. You receive an offer for full price with a 45 day closing. But the buyer has not pre-qualified with a lender yet. The buyer's agent has assured you that the buyer will qualify for a loan and definitely has good debt to income ratio. So you go ahead and accept the offer. The buyer heads to the lender and gets the first step done - the pre-qualification. You receive a copy of it as proof they are in fact able to buy the home. They've been pre-qualified for an FHA loan.

The seller now has to consider that they may need to paint their home, seal all the windows, seal the foundation cracks, and might have to replace the roof. Suddenly that full price offer is reducing their net by $10,000 to $15,000 because you have an FHA loan instead of a Conventional loan. Can the seller back out? Possibly. Their good agent will do everything possible to keep this offer moving forward. But, it may mean you need to offer more than full price to offset the cost of all the repairs. Are you prepared to do that? Will the home appraise for the higher price? The deal could fall through because you didn't have your pre-qualification done ahead of time.

The seller may not have accepted your offer at all, or may have accepted it contingent upon obtaining a Conventional loan. There are probably a thousand ways this example could have gone down. But having the pre-qualification is the first step to being able to make a solid offer on the home you've fallen in love with.

If you need help finding a lender, please call me. I work with several lenders and am always available to help you locate one. I also suggest interviewing several lenders, just as you would agents, before you make your application. You don't want to pre-qualify with several lenders, but you do want to interview several before deciding which one will work with you best.

And once you have pre-qualified, we can start shopping for a home that you will fall in love with.

If you have questions, please call me at 402-239-9668 or visit My Website and click on the Buyer's Resources tab.

The Home Buying Process - Selecting An Agent

I'm going to write a series of blogs about the process of buying a home. The first step is selecting an agent.

You've decided to buy a home, so you start searching the internet for your next dream home. You find it. You call the list agent. You go look at the home.

Now what?

Have you considered who the list agent represents? I'll give you a hint....it's not you. Unless you sign a buyer agency agreement, and then sign the Dual Agency forms, "your" agent is still representing the seller. Now of course, the agent does have specific duties to you to be fair and honest. But the duty of getting the best deal is still on the side of the sellers.

So, you really need to make shopping for an agent the first step. I know it's not any fun, but it's the best way to ensure you get an agent to work FOR you.

So, how do you find that agent?

Start with friends, family, or neighbors that have recently bought a home. Whether they recommend their agent or not, they'll be able to tell you what they wished they'd done differently.

Next, find a few agents to interview. Don't just pick one and go. Did you just throw a dart at the phone book when you were choosing a doctor? (Ok, so you had a print out of the Google and Yelp listings.) This is a home purchase, even a small home is a major purchase and a decision you'll live with for the next 5-7 years, if you're like most people. You want to make the right choice.

Now, whether to hire an extremely experienced agent or a newer agent is all up to you and your comfort level. After all, every agent was new once. And just because they haven't been in business for 30 years, doesn't mean they aren't smart and won't be good at their job. But ask about their experience. And if they don't have a ton of experience, ask about their support system. Do they have a good broker? Do they have a network of other agents that will help solve any problem that may come up?

Selecting your agent has a lot to do with personality. If you just don't click, don't hire that agent. You want someone that "gets you." Someone that understands your way of life and how you plan to live in your new home. This agent will be able to point out the pros and cons of any home for you. They will also be more able to find a home that you might not have considered, and it could be just perfect for you.

You'll also want to ask what their process is for buying a home. Will they show you a home any time? Do they have specific showing hours? Are they available on the weekends? If you plan to buy in the next month or two, are they planning a vacation that will take them away from their job of finding you a home?

What is the agent's views on inspections? Do they match your views? What is the agents negotiation style when it comes to negotiating repairs on the home? You see some agents believe strongly in getting all inspections and making the home owner fix everything. Other agents allow you to pick and choose the inspections you have after informing you of their benefits and costs. Then making the requests for repairs becomes more of a negotiation process to ensure that it is a win win situation for both you the buyer and the seller. You see, some repairs need to be made before you buy a home. But others aren't as important and should not be used as deal breakers. There's no reason everyone can't feel like they've come out on top when buying your new home.

Shopping for a new home is fun and exciting. But it's not the time to choose your agent or get to know them and their process. After you have an accepted offer your agent should make the closing process as smooth and seamless as possible. It's always going to be a long wait to move it - nothing can change that. It will always be a little stressful getting to the closing table. Choose an agent that will be able to minimize the stress. And if yo're successful in doing that, tell all your friends!