Home Buying Steps / Process:

Step 1 - Getting Pre-Approved Prior to Shopping for a Home

It's obviously important to know how much home you can afford, what type of down payment to budget for, monthly mortgage payment as well as what type of loan program you'll be using to finance the new property.

Certain mortgage loans have residence type, HOA, appraisal or insurance restrictions that your agent needs to be aware of prior to showing you listings.

A personalized strategy session with a trusted mortgage professional should address all of your initial loan approval questions, as well as uncover any potential challenges that can complicate the entire transaction.

Step 2 - Assembling Your Home Buying Team - Knowing The Players

The home buying process has many steps, participating parties and potential challenges that can be overcome with the right team on your side.

Your agent, attorney, title company, insurance agent and lender all have important roles to play.

Buying a new home is literally a team sport since there are so many tasks, important timelines, documents and responsibilities that all need special care and attention.

Besides working with a professional team that you trust, it’s important that the individual players have the ability to effectively communicate and execute on important decisions together as well.

Step 3 - Purchase Offer Submitted

Assuming that you've already been given a mortgage approval and have a firm understanding of the type of property you are qualified to purchase, your agent will submit your purchase offer to a listing agent or seller.

Once you receive an accepted offer, the due-diligence period starts a series of timelines for final mortgage approval, appraisal, inspections and other requirements which would be spelled out in the terms of the contract.

Step 4 - Conditions and Paperwork

It comes in from all angles at this point, lenders, processors, insurance agents, sellers, real estate agents.... and the list can go on.

Step 5 - Closing

A successful closing requires all of the team players to come together at the same time, with the same agenda, on the same date.... with numbers and figures that match.

Related Home Buying Process Articles:

Renting vs Buying

Buying a home versus renting is a big decision that takes careful consideration. While there are several biased sources that can make arguments for or against owning a home, we’ve found that most home buyers base their ultimate decision on emotion. Cost, Qualifying, Freedom, Maintenance and Security are some of the main reasons for renting, as well as owning.

.......(read more about Renting vs Buying)

Seven Things Your Agent Should Know About Your Approval

While many experienced real estate agents have a general understanding of the mortgage approval process, there are a few important details that frequently get overlooked which may cause a purchase to be delayed or denied. New regulation, updated disclosures, appraisal guidelines, mortgage rate pricing premiums, credit score, secondary approval layering, rescission deadlines, property type, HOA insurance requirements, title and property flip rules are just a few of the daily changes that can have a serious impact on a borrower’s home loan financing.

.......(read more about Your Approval)

Important Factors To Consider When Purchasing A Foreclosure or Short Sale

Short sales, foreclosures and new construction homes all have caveats that need to be considered when pursuing financing. If the guidelines and potential pitfalls are not properly understood, you could face delays in closing or potentially even a denied loan. Property Condition, Timing Challenges, New Construction Appraisal Process... are a few issues that your agent will need to have experience paying attention to in order to ensure a smooth mortgage funding and closing process.

.......(read more about Purchasing A Foreclosure or Short Sale)

First-Time Home Buyer Credit Checklist

Getting a new mortgage for a First-Time Home Buyer can be a little overwhelming with all of the important details, guidelines and potential speed bumps. Since there are so many rules and steps to follow, we've put together a simple list of Do’s and Don’ts to keep in mind throughout the mortgage approval and closing process. Consolidating credit cards, paying off collections and multiple inquiries on your credit report are a few things that could have a negative impact on an approval.

.......(read more about First-Time Home Buyer Credit Checklist)

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Frequently Asked Questions:

Q: What Is The Difference Between A "Buyer's" and "Seller's" Market?

Simple economics is the rule of thumb here.

Everyone wants to "buy low and sell high," but the truth of the matter is there is no way that can happen for everyone, every time.

Seller's Market = More buyers than sellers

Buyers Market = More sellers than buyers

Q: Where Does My Earnest Money Go?

The Earnest Money Deposit is credited back towards the buyer's closing costs and/or down payment.

Any additional funds are given back to the buyer from the escrow company.

Q: Do I Need A Home Inspection?

Some mortgage programs require a borrower to get a home inspection if it is mentioned in the purchase contract.

Either way, there are several reasons why it is important for a home buyer to have a licensed professional take a closer look at a property before the transaction is finalized.

.......(read more about home inspections)

Q: Does it matter if I buy a home that is part of a Home Owner's Association?

A Home Owner Association may have the power to determine the color of your home, the number of pets you have and the type of grass you have to plant.

They also may have the power to levy assessments, dues and fines.

Or, they may be as simple as collecting a few dollars per year to make sure the grass is cut in the common areas.

.......(read more about HOA Hurdles To Be Aware Of)

I wasted a few hours this week cleaning up the messes that real estate agents created for their first time home-buyers.

End result - loan officer still looks like a jerk, but now the borrowers are really confused about who to trust.

I’m going to combine about five separate scenarios and conversations that I had this week into one rant just to get my point across.

First of all, the mortgage industry is changing very rapidly.

True  mortgage professionals are paying attention to things like:  HVCC, concerns of HR1728, Mortgage Insurance companies changing their guidelines, Fannie’s new condo rules, FHA fico score requirements, Loan Level Price Adjustments, new FHA appraisal guidelines, adjusting interest rates in an unstable market, and a constant stream of mortgage Twitter chatter that only adds to the noise.

For those of us primarily working with FHA First-Time Home Buyers, we’re also keeping tabs on the $8000 Tax Credit being used as a down payment, as well as how long the Fed plans on purchasing Mortgage Backed Securities to keep rates lower.

Just as real estate agents are learning about short sales, bank owned properties, and transparency, mortgage originators have a full-time job keeping up with industry news so that we can lead our clients down the right path.

I don’t think that I need to throw another 9 links in this post to demonstrate that there are a lot of things real estate agents and loan officers need to understand before we can express with confidence to our clients that we truly have a handle on their unique scenario.

Imagine what the effect would be on a first-time home buyer if puked all of this overwhelming information on a them in the first 10 minutes of the initial phone call?

I had to do this all week just so that the agents and borrowers would understand why I wasn’t able to issue a quick pre-approval letter and GFE simply based on a 15 min phone call and credit score.

We’re in a tough market, and I totally empathize with the hard working agents who are competing for new business by giving the highest levels of service possible.

However, in an attempt to provide “motivated” buyers instant gratification, you’re screwing things up for the loan officers who are only here to help everyone accomplish their goals.

There is a system that loan officers have to follow in order to earn the trust of new clients, especially first-time home buyers.

We have to help them define their short and long term investment goals, budget for a down payment and closing costs, determine an affordable monthly payment based on their entire financial scenario, and then plan an exit strategy.

The process of obtaining mortgage money is way more than shopping for the best rates of the minute and then throwing a worthless pre-qual letter up against the wall just so that you can get that offer in ASAP.

We can’t just deal with the details later.  It doesn’t work that way anymore.

I’ll never understand why an agent would be willing to spend an entire weekend showing homes to a new borrower before they’ve had a chance to meet with a loan officer.

“But I’ve got three lenders who work 24/7 for me that can get anything done.”

My response - Why toy with the emotions of your clients?  It is cruel to tell them that you’ll have one of your preferred banks work up a quick pre-qual the morning before you take them out to view properties.

I had one agent this week tell me that I didn’t understand how real estate worked -  that we had to move on these properties before someone else put in a better offer.

I heard the excitement in the hopeful homeowner’s voice when she was describing how perfect this new condo would be and how they’ve been searching for a while to find the best fit for their new family.

Imagine their disgust in my company’s ability to “perform” under short notice when I explained how they would have to wait until we could qualify them and the property.

“I don’t understand, (Agent) said that we would be OK since we had good credit and a decent down payment.  My dad didn’t have to deal with this when he bought a house three years ago.  Why wouldn’t banks want to give us money, I thought the government has programs for new buyers?  My agent told us that she had lenders who could get things done…  I don’t trust you, maybe we’ll shop around until we find someone who is willing to tell us what we want to hear…..”

It sucks being the bad guy, but this could have easily been avoided if the agent painted a more accurate picture of the Las Vegas REO home buying process for her young borrowers.

So what happens from here?  Lenders will continue to criticize agents for being pushy, and agents will continue to call us idiots and scam artists.

Regardless of how it sounds, I’m not really against agents.  Our mortgage company is primarily a purchase shop, so we highly depend on referrals from agents and past clients.

We just have to learn how to respect each other’s roles so that our clients don’t suffer.

My personal agents know better than this.  Well, most of the time, but I’m still appreciative of their loyalty.

Either way, here is the correct process:

1.  Borrower gets approval from loan officer

2.  Real Estate agent shows borrower new homes

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Why Should Real Estate Agents Stop Playing Loan Officer?

• Because lenders have a difficult enough time trying to earn trust in this market without agents causing more doubt

• The interest rates your other clients got last week don’t apply to your new borrowers’ scenario

• Per HVCC, originators are not able to help influence value

• You can’t just easily submit the same loan to multiple banks until an approval sticks

• An actual approval letter requires an underwriter, not just a loan officer’s signature

• A “Good Job” doesn’t necessarily qualify as acceptable income or employment

• A “High Credit Score” is only one aspect of a credit report that an underwriter will analyze

• A “Big Down Payment” still may have to pass a source and seasoning test

• “Owner Occupied” means that they actually have to work and live in the same town

• “Under Valued” does not = a lower LTV in a purchase transaction

• A roommate’s share of the mortgage payment does not = additional income

• Rental income on another investment property may have to be verified

• Equity in other properties does not constitute as liquid assets

• “Pre-Approval” letters are only as trustworthy as the loan officer issuing them, and even then they still may be worthless

Obviously, there are some lending scenarios that are no-brainers, but I generally need to ask a borrower a series of 20-30 questions and run a full DU or LP approval before I can give a listing agent my honest opinion about whether or not that deal is going to close.

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Original post on BloodHoundBlog.com - Why Real Estate Agents Should Stop Playing Loan Officer

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Related Articles: 

• About Raintree Mortgage
• Las Vegas First-Time Home Buyers
• How will HVCC Impact Las Vegas Real Estate?
• Las Vegas 2009 FHA Appraisal Guidelines
• HR 1728 Mortgage Reform and Anti-Predatory Lending Act
• What's an HVCC, and How Does It Affect The Real Estate Market?
• HVCC Is Up and Running

A Short Refinance may be an option for Las Vegas homeowners who are making high mortgage payments on a property that is worth less than the amount owed.

Even though the most recent round of legislation with the new housing rescue plan does not provide for a significant principal reduction, there are still cases where a homeowner can possibly negotiate for a short payoff from their current lender and then obtain a new FHA mortgage at a lower loan amount.

Not to be confused with the “Obama Refinance” that does not allow for a modified loan amount higher than 105% Loan-to-Value of the first mortgage on primary residences, a short refinance principal reduction loan is a program where a homeowner negotiates for a reduced payoff from their current lender and then qualifies for a new FHA mortgage with a new lender.

I wanted to write a quick post that answered a few of the basic questions about a Short Refinance or Principal Reduction Refinance.

.......Read More About "Las Vegas Short Refinances"

Have you ever been given a client and then hear from your referral partner that they complained about your service or lack of response?   

As a loan officer, I work with several agents who generate most of their business from their web sites.  Obviously, Internet "leads" require instant follow up and a significant amount of relationship building before they can be considered real clients.  I hate even using the term leads because it has a negative non-personal tone, however, lets call it what it is for the sake of this blog post.    

So, when my agents get a call from a lead complaining that they haven't heard back from me or that I'm not able to provide them with the program they may be searching for, it makes me look bad....

Or does it? 

Maintaining a relationship with a referral partner is a full-time job.  My agents and I are all aware of each others business and client communication systems.  So, when a lead complains about not receiving a phone call or something else, we all know that they are pretty much making up excuses for not wanting to go through the home buying process with us.  At that point, we can re-examine what needs we should focus on satisfying in order to turn the lead into a loyal client. 

On the flip side, when a loyal client complains, we know that there is an issue which should immediately be addressed.  Regardless of the truth, the client's perception is the only thing that matters.  Maybe not returning a call after 8 pm constitutes "lack of service" in their eyes.  Who knows?  Either way, we can focus on fixing the problem instead of spending our time trying to defend ourselves.  It really doesn't matter who's side of the story is correct. 

Our clients see it that way, so we should too. 

To the point:  If you trust your referral partner, there shouldn't be any reason to have multiple discussions about your integrity.  I know my agents work hard, and they are confident that I'm doing my best to make them look good as well. 

Question:  When your clients complain, who do your referral partners believe?   

Just read a great article on MadMortgageWorld.com titled "Open Letter to the Mortgage Industry"

Daniel Martin wrote a passionate message about how information needs to be free, and the mortgage professionals who participate by sharing their online voice will be the new leaders of our industry. 

I agree with most of Daniel's message.  However, what about the industry professionals who aren't in the social media loop, will they be left behind as well? 

Will the mega mortgage seminars disappear or evolve to include a new breed of influential Internet voices?   

We openly promote blogging and social networking within AR and other networking communities because most of us are confident that only a small percentage of our industry will actually adapt to the new rules of mortgage sales and marketing.  Also, the education through conversation is exciting and it feels good to enable each other's success by sharing valuable information about our personal Internet marketing strategies.  

I'm just wondering what will happen to the other 97% of industry professionals who choose not to participate.  The leaders, speakers, vendors... they absolutely have to create a dominant Internet presence.  But there will still be some top producing loan officers and real estate agents succesfully using the same proven systems that they learned from the old school innovators. 

Probably just a rhetorical question, but what would happen if everyone was a master real estate or mortgage blogger?