Knowing for a fact a home you made an offer on that had been accepted is the home for you is a beautiful feeling. That being the case, what if there is deal breaker lurking out there that may kill the deal?
There are deal breakers that cannot be avoided. But there are several that can be avoided. Pay attention to the following pitfalls so your dream home becomes your actual home.
Do Not Drop the Ball- Follow Up on Your Mortgage Preapproval Loan Conditions & Do Not Increase Your Debt Payments
Home purchases end up not closing more often because the rules of a purchase money are not complied with by the borrower. A borrower may have received a mortgage loan preapproval, but that does not mean the loan is fully approved and that the loan will close and fund. Here is how the mortgage loan approval process works:
A. The mortgage loan application is preapproved.
B. The lender will process your loan. Processing your loan includes verification of employment, income, a real estate appraisal, a credit report, two years tax returns, two months bank statements and the borrowers last two paycheck stubs.
C. Lender Underwriting – When the lender’s loan processor has a complete loan package they submit to an underwriter. If all the loan criteria have been met, the underwriter will approve the loan
D. Closing – The sales transaction if handled by a local escrow officer. The borrower signs the loan mortgage and the promissory note. After the closing, the lending underwriter will access a soft credit report to confirm the borrower has not taken out any other debts. Once this has been confirmed the lender will wire the funds for the purchase to the title company.
E. How to Make Sure Your Purchase Funds – Do not take out any credit cards or buy a car until after your home purchase closes. Doing so will most likely force the lender underwriter to decline your loan. That would be a disaster.
Do a Complete Review of the Documents of the Homeowners Association Prior to Making Your Offer
When you buy a home in home community that is managed and governed by a homeowner’s association, part of the transaction includes a review and approval by you of its bylaws and general membership agreement. Due to the fact there could be deal breakers in the agreements you are being tasked to read and sign, it is critical for you to read all the documents the moment they are handed to you.
When you do your document review be sure to look for and take notice of property liens, mechanics liens, and lawsuits that have been filed against the homeowners association, the builder of the development or the developer. Be sure to look for homeowner’s association line item red flags. The documents will be rife with legal jargon and technical terms. Pay a reputable real estate attorney to review them for you. The attorney will give you advice regarding the documents and any pitfall deal breakers. Doing so is a good investment. It is better to know about any issues early than at the end that will kill your deal.
Getting Your Purchase Deal to the Finish Line
Purchase money real estate purchase transactions normally close. These days the lender and the real estate broker of the buyer and seller are good at providing the required information and knowledge you need to make your closing happen. Pick a successful broker with a proven track record that comes with great referrals. Be direct and call the brokers referrals and ask them to tell you about their transaction. Pick a real estate broker that is highly recommended. To be successful when buying a new home, take your time, be patient, be diligent about following up on all the requirements you need to meet for your loan to close and finally follow the guidance provided by your real estate broker and your real estate attorney.