OK….this is it. 2012. The year everyone says we will see more repos and ‘short sales’ than in 2010 or 2011. As bad as that sounds, it’s a huge opportunity for buyers. Unfortunately there are so many buyers who are totally unprepared to take advantage of a great opportunity when it comes along. They just don’t seem to know where to start. If this describes you, read on.
- Before you look for a house, look for a loan officer. Really? Yes! Because before you go home shopping, you need to know how much loan you can qualify for. It’s no longer about how much you make, but also about your credit score and things like ‘debt to income’ ratios. You need a loan professional as much as you need a good Realtor.
- Meet with the loan officer. Only a professional with knowledge of the latest loan programs and the rules pertaining to each, can help you choose the right financing to effect the purchase of your new home. For example, did you know there are different rules for the finance of a condo than a single-family residence? And buying a beautiful rural acreage with a converted mobile home on it is impossible with some lenders. So wouldn’t you like to know someone you can call when a question like this comes up?
- Know your credit scores. Did you know you have three scores? Yep – there are three distinct credit bureaus, each with their own method of scoring. So if there are errors to be corrected, or a score that is a little low, wouldn’t you like to know that before you are in the midst of a home purchase? Before you’ve told all your friends you’re buying a new house? Maybe you just need to lower your debt to income ratio, or pay up on an old debt. Better you know what is needed now than after you are in contract on your dream home. That is not the time to deal with credit issues. Right now, TIME IS YOUR ALLY!
- Get your income information together. If you’re self-employed this is even more critical than for those who are hourly or salaried. You will definitely need to provide current and past income tax returns since you won’t have W-2’s. But even if you are salaried, your lender will need to evaluate things such as the timing of bonuses and commission income. They may not even take into consideration overtime pay if there isn’t sufficient consistency. These are things you need to resolve ahead of time.
- Assets. This is one time, cash is not king! If you have unusually large sums of money, it needs to make sense. Where did it come from? If it comes from unreported income or is sitting in a safety deposit box, it’s no good! So if you have this kind of problem, time is definitely your ally. Talk it over with your loan officer and let them guide you.
- And finally – Work with a REAL Realtor! What does that mean? It means work with someone who’s doing this as a profession, not as a side job. Your agent needs to be knowlegable of the market and the latest changes in the law and finance. Afterall, do you really want to trust the largest single purchase of your lifetime to someone who is only doing this to make a few extra bucks? Parttime?