What are some surprises that first-time buyers encounter when purchasing a home?

Asked by Trulia, San Francisco, CA Thu Mar 1, 2012

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Thu Mar 1, 2012
This info is from a blog I wrote a little while back...

There seems to be a fear out there that banks are not lending money. This is absolutely not true. If you do decide to either purchase or refinance a home there are some items that are helpful to know prior to beginning this process. This article is intended to educate you about some of these complexities. There are always issues that could arise but having knowledge of the following items could allow you to alleviate some of the potential issues or at least educate you about what could happen.

This issue would only be applicable if you are purchasing a home or putting money down for a refinance. Depending on the type of loan you are applying for the lender can ask for up to 60 days worth of account statements from the account you will use for funds at closing. They now require borrowers to show proof of any type of non sourced deposits to the account being used for down payment. They will not question direct deposits from your employer but any other deposits generally speaking over $100 will require additional documentation.

Once the process has began and all required documents have been sent to the underwriter, at that point the file should receive an initial approval. At that point the lender could require us to obtain a few documents from one or all of the following people involved in the transaction: you, your real estate agent (purchase), insurance agent, the appraisal management company or the attorney. There is a possibility that once the lender receives the items they requested at the point of initial approval there is a chance the file could be re-conditioned.

This could happen for 1 of 2 reasons. The first one is the items we sent them could spur on additional questions and the second is the possibility that the underwriter missed something the first time.

Be aware that after your initial approval and prior to closing the lender is now required to re-pull the credit. If there are any drastic changes in your report this could cause you to not qualify for the loan. The following are a few items to review to insure we are able to maintain your approval:

•Don’t apply for new credit of any kind
•Don’t pay off collections or charge offs
•Don’t max out or over charge your credit card accounts
•Don’t consolidate your debt onto 1 or 2 credit cards
•Don’t close any credit card accounts
•Don’t pay late
•Don’t allow any accounts to run past-due… even 1 day
•Don’t dispute anything on your credit report.
In addition any items that have already been disputed on your credit will need to have the dispute verbiage removed

With the new Home Valuation Code of Conduct appraisal system lenders have no way of assuring value. We have no control over this. Also even after the appraisal has been completed the lender will do a desktop review and this also could cause an issue with value. With an FHA deal more than a conventional deal there is a possibility that the appraisal could come back “subject to.” In this case work is required on the home and a final appraisal inspection will be required.

This article is not intended to scare you away from refinancing or purchasing but more as an educational piece. Being educated about the process and having a good lender on your side will help you have the smoothest process possible.

Feel free to contact me directly if you have any questions. 678-578-7611 or email me at bhartman@cmghl.com or visit me online at http://www.brad-hartman.com
Web Reference:  http://www.brad-hartman.com
3 votes
Solomon Gree…, Agent, Duluth, GA
Thu Mar 1, 2012
1. Highly desirable properties often sell above list price.
2. Busy agents welcome the opportunity to serve motivated buyers, but will pass on those with unreasonable demands.
3. Addenda must be included with offers that control the sale of bank and GSE-owned properties.
4. Banks and GSE's are not so desperate to unload properties that they're willing to accept low ball prices. Instead, they'll just pass on their offer and sell to the buyer behind them.
5. If you're looking for a property with monthly payments of less than $600 per month, be prepared to search a long time or buy a fixer upper.
6. Listing agents may or may not return phone calls because they carry several listings and therefore prefer to work with experienced buyer's agents.
7. Listing agents protect the seller's interest and not theirs, so their protective options and available contingencies are often not included in offers.

Solomon Greene
REALTOR® Keller Williams Realty Atlanta Partners
(678) 775-2677
2 votes
Priscilla Ha…, Agent, Powder Springs, GA
Thu Mar 1, 2012
I like Solomon's answer it's dead on. The main issues I've encountered with 1st time home buyers being under-educated or misinformed about is that they think houses aren't selling, so when they see a home they love they erroneously wait too long to submit an offer and it's already under contract or it has multiple offers on it (last one I had in a multiple offer scenario had 32 offers on it). I advise them that if they love it to submit an offer on it, but they for some unknown reason, think they shouldn't buy without seeing more houses.

The other issue is for the bank owned homes that require a pre-qual letter from the Selling bank. They just don't understand why they need to get another pre-qual letter just to submit an offer and I have to agree with them on this one. For one I think the banks are limiting the amount they can sell the home for because a lot of buyers just refuse to obtain another pre-qual letter and move on to the next house. The other reason I don't particularly care for this requirement just to submit an offer is I really don't know know what makes the Selling bank think their standards are higher than any other mortgage lender, because they qualified the previous owner of the home that allowed the home to get foreclosed on so they really can't think their standards or guidelines are any better than any other bank.
1 vote
Latisha Thom…, Agent, Atlanta, GA
Thu Mar 1, 2012
Some of the thing that I found that First Time buyers are items that have been on credit dont make sense, items that are may be withdrawn from you bank account that dont make sense. other then that most things that lenders are requiring you should know once you speak with loan person when he view your credit and income.
0 votes
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