When the real estate market is like it is today, thinking outside the box is important. It’s important to getting your home purchase, sale, or refinance to the closing table.
It’s great when you go to buy, sell, or refinance a home and everything works out exactly the way everyone intended. If you have ever bought, sold, or refinanced a property the odds are that this is not exactly how your transaction went. Most transactions are not as easy and smooth as everyone would like but most of the time you’re just facing some minor hurdles that can easily be resolved. Today however we are going to talk about the transactions that can go sideways or almost off the tracks all together but with some outside the box thinking do stay on track and get you to your final destination. We will also discuss some things to be aware of as you prepare for your home loan.
One of the biggest challenges when financing a home loan is just that, the financing. When you think about it, there is an entity that is going to let you borrow hundreds of thousands of dollars so that you can purchase your home. It’s safe to say that they have some skin in the game so it is reasonable that they would have some rules or guidelines that need to be met for them to lend you the money. Some examples of how a transaction can get caught up would be credit scores or derogatory items on the credit report, assets, and debt to income ratios.
Typically your lender will have worked through a prequalification and then a preapproval from the very beginning before you are under contract or lock in your loan for a refinance. However with so many guidelines and moving parts issues can arise later in the process. Sometimes a new credit report needs to be pulled and now the scores have gone down or there is a new late payment or collection. In some cases your assets or funds to be used for the transaction may have gone down for any number of reasons and now there isn’t enough money to close. In this case it might be an item that can be removed from the credit report or there may be a revolving line that we can pay down to get the scores back up. Here we might look for gifts from a family member or assets in a retirement account. Finally when the debt to income ratio has gone up we may need to pay off an item or 2 from the credit report. Maybe you can get removed from an authorized user account so that debt is no longer affecting your ratios.
We see many times where something is uncovered in a home inspection which is why we highly recommend you spend the money to have a great inspector go through the home for you. While there are so many things that can come up in a home inspection a couple that we have seen recently were a well that needed to have the water tested and the test came up positive for bacteria, and a roof that was thought to be too old. We found a professional and sent them out to clean the well water and it later tested negative so that transaction got back on track and in the case of the roof, again a professional went out to inspect it and determined that the roof still had 20 years of life left and it was in good shape.
Regardless of the unexpected events that come up with the buying, selling, or refinancing of your home it is important to remember that there is almost always a solution but sometimes you may need to think outside the box to find it.
*Some of the content of this article came from Episode 32 of the Mile High Mortgage and Real Estate Report with guest Luis Gonzalez.
The Mile High Mortgage and Real Estate Report airs Saturday mornings at 11am on AM1690 KDMT Denver’s Money Talk Radio Station