Long Beach Homes & Condos-7 Steps to Pre-Home Purchase Preparedness

Long Beach Real Estate & Home Loans

Long Beach Homes & Condos

7 Steps to Pre-Home Purchase Preparedness

1 – Choose a Lender

No it is not smart to just gift your business to a friend or family member, lender or Realtor. It is time to shop for the right lender for the job. My suggestion is to shop for a direct lender/loan originator. Removing the middle man from the transaction reduces your home loan costs. Direct lenders generally have a larger array of product available to them to shop from on your behalf and have built trust relationships with the wholesale lenders which you will benefit from greatly. Discuss your long range plan with your lender, have them explain the benefits of the loan programs available and decide which suit you best. Lenders have been closing up shop and discontinuing loan programs often recently; inquire if your lender plans on double app-ing your loan for your safety, a good one will.

2 – Checking Credit Scores Prior to Starting the Purchase

Your lender can pull your credit report for you. Many credit reports contain errors which can be costly to you. Finding and correcting these errors, prior to searching for your new home will reduce your stress levels.  This will grant you the time to repair the problems which would otherwise result in higher interest payments due to the higher risk you would appear to pose. You may find that you have been the victim of identity theft and decide to put your purchase on hold temporarily until you can clean it up.

3 – Be  Pre-approved Prior to Searching

What a shame it would be to find your Long Beach dream home only to discover that your credit is tarnished and will require several months of repair, or that you qualify for less than you need to purchase it. How are you going to submit an offer without a pre-approval in todays market? What Long Beach seller would consider that offer? How do you even know what loan amount you will qualify for? Why spin your wheels? Be smart, get pre-approved prior to searching.

4 – Have A Solid Financial Plan

Smart buyers start their search knowing how long they plan on owning the property. Armed with this information it is time to shop for a home loan that fits your plan. If you use this approach you will find more opportunities for lower cost home loans will present themselves. For instance, if you plan on owning your Long Beach home or condo for about 5 years (a smart plan in todays market) a really good lender may suggest a less expensive interest only ARM (adjustable rate mortgage) for 7 years, payments fixed for a term long enough to sustain your plan. With so many advising to purchase fixed loans these days, it is smart to educate yourself as to other viable options. Why pay a higher interest rate for a shorter term investment if you dont have to?

5 – *Insist on a Lock-In Letter

Demanding a Lock in letter assures the BUYER that there will be no surprises when signing Loan Documents, the interest rate promised to them will be the same they sign for at the end of the escrow.

6 – *Demand a Loan Commitment

Assures the BUYER the home loan they were promised will be the home loan they will receive; the terms will be as promised.

*LONG BEACH BUYERS BEWARE: If your lender hesitates in providing a Lock In Letter and a Loan Commitment, this usually means they have not secured the home loan as promised, and are likely still shopping the loan with the hope of finding one close to what was promised you.  There is no guarantee the lender will be successful in this endeavor.  A reputable lender should be able to provide you with both within 2 to 3 days of your request at no additional cost.  If your lender dances, find a new lender immediately.

7 – Waiting to Sell Your Home

With so many properties on the market and so few buyers, there is no guarantee that YOUR home will sell, or will sell in a timely enough fashion to meet the terms of any contract you write. This is true on todays market even if you price your home below market and it is in impeccable condition. It is true that you can acquire a bridge loan or use your equity line of credit to purchase, but what if your home does not sell?  Could you handle the payments?  Could you rent it and cover the elevated expenses?  Todays buyers are taking their time and are not settling for anything less than exactly what they want. Few sellers will risk removing their Long Beach Homes from the market to wait for your contingent sale, even in todays market. If you need to move, put your home on the market, price it right and sell it. Then shop.

Posted on October 1, 2007 by Laurie Manny