There are a lot of processes involved in home buying. And any of these—from house-hunting to securing pre-approvals, to preparing your paperwork, could cause some unexpected problems. We’ve identified four common ways you can experience some challenges when securing home loans. Observing due diligence and preparing for these eventualities will save you from a possible disastrous outcome.
Changes in Income and Debt
When applying for a loan, it’s customary to furnish your loan provider with a copy of your finances. This is required so that your prospective creditor will have an idea of your capacity to pay. In line with this step, we suggest that while waiting for the loan to be approved, you keep your finances stable. Of course, we recognize some factors are beyond our control (such as job loss or sickness). Nonetheless, for everything else within our control, such as unnecessary (large) purchases or sudden switching of jobs, try to avoid them, at least until after you close on your loan. This will prevent you from having to re-verify your income and debt-to-income ratio.
Errors in Paperwork
Almost all paperwork involved in home loans is legally important. And, as humans, we are going to encounter errors along the way. Thus, we suggest you double- and triple-check your documents as you upload them. Doing your due diligence on the front end can prevent later hiccups when it’s time to start closing.
Problems With the Inspection
An inspection can reveal issues in the home that can cause delays, but it’s one thing you shouldn’t skip. In fact, we highly recommend that you have a property you’re eyeing inspected. Holding inspections may cost you a few dollars up-front, and if your home inspection reveals the need for major repairs, you could end up having to move back the closing day. However, you may also ask the owner to shoulder the cost for the repairs before you close. Alternatively, you can request a decrease in the sales price to allow you to budget for repairs.
The Appraisal is Too Low
Appraisals are your lender’s way of making sure that they’re financing a home for what it’s worth, so it’s a crucial step in ensuring success for all parties. Usually, the amount you’re financing must be equal to or lower than your home’s value. The problem happens when your home ends up being valued lower than the amount you’ve financed. Then, you might have to get re-approved for the new loan amount.
Buying a home is both an exciting and dreadful process. It will really test your patience and resources. However, the challenges you’ll face can easily be countered with diligence and tons of preparation. To get the best out of your home buying process, contact an experienced lender at Total Lending Concepts today.