Before you begin your home search you should talk to a mortgage loan officer and get prequalified. Why? Because you need to know how much your monthly payments will be including taxes, insurance and HOA fees BEFORE you fall in love with a house that might be as much as $50,000 more than you feel comfortable committing paying every month. You want to make sure you have money for a pizza every once in a while….new tires on the car when you need them and of course, when the baby needs new shoes.
Getting prequalified means giving a loan officer all the paperwork they request….which includes paystubs and monthly commitments like how much your car payments are. The loan officer will run your credit…..so be honest with them about how many credit cards you have and how much a month you pay on them or if you’ve ever been late on a payment. Once the lender has verified that you qualify for a home loan you can begin shopping for your new home knowing you are looking at houses you can afford.
Your lender will now issue a “prequalification letter” that will be part of your sales paperwork the seller will review with your offer on the home. In Texas all lenders have the same forms for issuing this letter…….so don’t be fooled by fast talking lenders that suggest their letter is better than other lender letters. It is a state form….and they all use the same form. Your Realtor may be able to provide the other agent with a bio on you, maybe a story about what a cute family you have, how wonderful you are and why you are better than any other buyer that may be competing with you for the home….but having the prequalification letter is a must if you want the seller to consider your offer.
In Texas you will probably ask the seller for an “option period”…..so you can hire inspectors of your choice and then ask the seller to make repairs for items your inspector may find. Some sellers may agree to make repairs….others may say no to any repairs….but this is something you will do during the option period.
During the option period you should also review the terms your lender is offering you and possibly check on other lenders to see if they can offer you a loan with less charges. Having lenders compete for your loan is important and could possibly save you thousands of dollars over the life of the loan. As a Realtor I recommend loan officers….but do not receive any compensation from any lenders……so any lender your Realtor recommends is probably someone they personally know does a great job and closes on time. Check with your Realtor or ask your friends if they recommend a good lender. Get them competing for your business. No one’s feelings get hurt if you choose to use a different lender…..this is YOU looking out for YOU. If you do choose another lender make sure to get a new prequalification letter and provide it to your Realtor.
Once you are sure which company you are getting your loan from you should request that they order the appraisal. It is important that you wait to order the appraisal until after you have negotiated repairs…..because if a seller receives a phone call requesting the appraiser visit the house….they will be less willing to do any repairs. They know you are moving forward with your purchase when the appraiser calls to visit….so why bother making any repairs for you if they haven’t been negotiated already?
The appraiser will measure the house and review the most recent sold properties in the area surrounding your new home. They will give a value to the property…..based on the size, condition of the home, upgrades and homes that have recently sold.
Prior to signing for the purchase of your new home you should review repair receipts if your seller has agreed to make any repairs for you…..and visit the house if possible before signing your closing documents. On a purchase of my own I went to the house the day of closing to “walk” the property and discovered all the curtains and rods were missing along and the sellers digging up the solar landscape lighting…..I closed on the home but not without bags of curtains and rods and an apology from the sellers. If you are a seller be sure to read the contract so you are aware of what remains in the house at closing….and as a buyer, be sure to walk the property and confirm that everything that is supposed to remain is in the house. Before closing is the time to address those items…not after.