Archive for the ‘Home Loan Process’ Category

Tales of a Home Buyer – part 5

June 7, 2011

Written by Shawn DeVries

My Loan Officer now took my file (all 7,000 pages at this point) and submitted it to the underwriter for them to review and verify.  I was feeling a little more confident at this point that the loan would go through smoothly.  However, the first part of this process is not just for the underwriter to approve the loan, but to also to gather more information (called conditions) if needed to support their decision.  It’s kind of like the kid on the playground who says, “Oh yeah? Prove it!” when you say you can do a handstand or something else you can no longer do at age 39.  (There’s a whole other story there.  Don’t ask.)

I am happy to report; my loan was approved by the underwriter with minimal conditions.  Those were submitted and my Loan Officer and Title Agent were soon given the all clear sign to get the final documents ready for the closing.  If you think the papers you signed for your application were excessive, you haven’t seen anything yet.  Some of the documents are the same ones you signed for the application.  You get the privilege of signing those again.  Others are new forms that detail your loan and how you will repay it.  Then there are others that give you important information about the whole transaction, and then even more that verify you were given that information.  As you may have guessed, there were a couple politicians and lawyers involved in determining the process for buying (or even refinancing) a home.  I highly suggest a big breakfast before and a hand massage after the closing.

The day of my closing seemed to never come.  The dream of owning my own home was finally here after almost 3 years of planning and hard work.  The moment the keys to the front door were placed into my hand was, as they say, priceless.  Owning a home is not just the purchase of piece of property.  A home is where you raise a family, share memories, retreat from the world.  It is an investment unlike any other.  Stocks and bonds can never hold the emotional ties that a house does.  A home is not just brick and mortar; it is a part of who you are.

We, at Awareness Home Funding, have always said we had one of the best careers there is.  It is a high honor to help someone with the most significant transaction in their lives.  We’ve been through the process – not just as loan officers and processors, but as home owners ourselves.  We haven’t forgotten the feelings and emotions attached to the address.  I’ve shared my story, and you have (or will have) your own.  The point in sharing mine is that we understand, completely, and are here to help you with compassion and expertise.  We’d love to be a part of your unique story and happy ever ending.

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Tales of a Home Buyer – part 4

May 26, 2011

Written by Shawn DeVries

After getting the purchase agreement signed I again pulled the needed documents for my Loan Officer.  (Yes, all 4,000 pages because 3 months had passed and updated information was needed.  We really do understand what buyers are feeling.) My information was entered into that program again that analyzes the data and based on preset criteria makes a decision on whether or not to approve my loan.  This “little” program can really freak you out sometimes, and all for no apparent reason.  

Ironically the same feelings can occur when you are refinancing your home.  These transactions are big deals and are a significant portion of your personal financial status.  It is no surprise that a borrower will feel some angst that is in direct proportion to their emotional investment to the home.  Highly emotional people will be highly invested into the process.  (I would like to say at this point that in case you have not guessed, I am a passionate person.  My mom will probably describe me in other words, but let’s not get her anymore involved than she already is, okay?)  Fortunately, these results came back just fine too on my loan.   

The next part was to develop my case in order for my Loan Officer to submit my file to an underwriter.  At this point in the home buying process your lender has gotten to know you fairly well.  They understand your financial situation and know what your goals and dreams are.  At least your lender should want this home for you as badly as you do.  If not, find out why.  The underwriter however does not know you.  All they have in front of them are numbers to compare and analyze.  The documents you submit need to tell your story for you.  Share what you need to support their decision so they see you as a low credit risk. 

Shortly after my offer was accepted and the paperwork fun began, I had a full inspection of the home done.  I was relieved to know there were no major issues to resolve or problems to fix.  For a home that was over 45 years old it was in amazing condition.  Getting an inspection is a crucial step in buying a home.  You want an expert without emotional ties to give you an unbiased opinion of what you are buying.  Follow them on the inspection.  Look at what they are looking at, poke where they poke and ask lots of questions.  A good inspector will tell you what needs attention and what is good with the house.  They should be able to also tell you how serious an issue is.  Telling you your furnace is getting old isn’t very helpful.  Letting you know the average life expectancy of a furnace and verifying the age of your unit is helpful.  Letting you know where your unit is beginning to show signs of wear is also beneficial.  Take good notes while on the inspection, but also get their findings and recommendations in writing.

Title work is another major piece in the process.  The title agent confirms that there are no liens against the property that would prevent the house from being sold.  It also confirms who the rightful owner(s) currently is (are), that property taxes are current, and prepares the paperwork so that there is a smooth transfer of ownership (among many other steps).  Title agents are also a great partner to have when buying a home from a trust (like I did), out of a foreclosure or short sale or any other transaction that may involve a bit more documentation.

The third significant step that happens at this point is having your home appraised.  Your lender wants to know the true market value of the home you are buying.  This doesn’t mean they are checking on how well you negotiated and if you got a good deal.  They are looking to protect their investment in you.  This house will be the collateral on the loan.  A lender does not want to lend more than what the property is worth.

After a slow start in finding my dream home, the loan process went very smoothly.  Supporting financial documents?  Check.  Good inspection?  Check.  Appropriately appraised home?  Check.  Title clear and without liens?  Check and check again.

Tales of a Home Buyer – part 3

May 20, 2011

Written by Shawn DeVries

Not long after, that call did come.  A friend of a family member was selling her parent’s home and was looking to her contacts first for potential buyers.  Fortunately, besides just looking online and in papers, I had told my family and friends that I was shopping for a house.  I also told them what I was looking for and to keep their eyes open for me.  When those big steps in life come up, it is important to enlist the help of those who know you best.

The sellers were selling the property by themselves without a realtor. (A For Sale By Owner.)  Had I not been employed by a lender I probably would not have considered this prospect.  I wondered how much experience they had in selling a home.  I wondered if they had any help lined up to handle this transaction. Yet, while I had some serious concerns I also figured that at this point I was only looking at the place.  So off I went. 

Remember that houses have personalities all their own?  This one was warm and inviting.  This place had character and charm.  This house could easily become my home.  I let them know I was interested but left myself an out.  With spring break coming I would be out of town.  So we made arrangements to talk again after my vacation and that if any other offers came in they would call me to see if I really wanted the place.

During my vacation I could not get that house out of my mind.  By the time my short hiatus was done, I had the place re-carpeted with new laminate flooring, fresh paint and my furniture all neatly placed inside.  This was all in my head of course, but I was hooked.  Again we set an appointment to meet and I made them an offer.  While they remained cool and asked for time to deliberate I was given a good feeling when I left. 

They called first thing the next morning to ask where to fax the signed agreement.  I was screaming with excitement!  I had found a house.  (I was actually screaming inside since I was at work, but I was still really, really excited.)  Now the real work began.

Tales of a Home Buyer – part 2

May 17, 2011

Written by Shawn DeVries

From all I have read and been told this was my market.  Houses are in large supply, foreclosures are around every corner, prices have come way down; I would have a huge selection to choose from.  Or so I thought.  While there were plenty of homes on the market, not all of them fit my criteria or needs. 

Now let me stop just a moment and say that there is a significant difference between needs and wants when buying a home.  I may want something from the pages of Better Homes & Gardens, but I need a roof over my head that won’t fall over at the slightest breeze.  I may want a master suite with garden tub and walk-in closet, but what I need are three bedrooms and toilet that won’t leak.  You understand.  Dream about that perfect house and go for it, but make sure your dreams align with reality.

Ok, so off I went to start shopping, real shopping.  Up until now I had been just window shopping – looking on line, driving through neighborhoods, leafing through the newspaper.  Now was my time to go inside the houses and really take a good look.  I was crushed!  I was looking at mostly foreclosure homes and expected some dirt and debris in these vacant places.  What I found was absolute filth, half-completed and poorly constructed projects, and plain shock as I wondered how anyone could live this way.  Didn’t their mother ever show them a broom?!  What were these banks thinking in even listing a house in this condition?  These were not just small projects to make a house my home.  I was looking at major repairs perfect for the HGTV shows like “Over Your Head” and “DIY Disasters” where some poor home owner has bitten off way more than they could chew.  Uuugh!

However I was determined.  (Remember I am living with my parents so being a motivated buyer doesn’t even come close to describing my drive to get this accomplished.)  As I looked, I started to expand my criteria; and searching online makes this process very simple to do.   In adding condos to my list of options, I soon found one that seemed to fit.  I made an appointment to see the property and fell in love.  While I would need to make some slight modifications, it would work for me.  Best of all, I could actually picture myself in the place. 

It sounds a little odd to say, but houses (and condos) really do have personalities.  When you walk into a place for the first time there’s a certain feeling that you receive.  Some places feel cold and sterile, others warm and inviting.  There are properties that exude formality and structure, and others that say this place knows how to throw a good party.  This condo seemed to work for me.  So I wrote an offer. 

My offer was admittedly low.  However, being in the industry I knew about some limitations some lenders have on properties being flipped as this one was.  So I made my offer supported with documentation and waited to see what would happen.  The wait, while only a few hours, was excruciating.  What are they thinking?  Do they understand my offer?  Can they see that I am a good buyer?  Why would they not accept my offer?  Are there other offers being considered? 

The answer came back swiftly with a simple, “pass”.  The response felt like a sucker punch to the gut.  But why?!  This makes perfect sense to me.  What’s your problem anyway Bub?!  Regardless of my feelings, this place was not the one I would eventually call home.  So my search continued.

I found another condo in the development that offered a bit more of what I wanted on my wish list, and another offer was made.  This offer felt different.  I was more guarded to the response.  I was hopeful, but prepared for a “no”.  I liked this place too, but was not nearly so in love with it.  Maybe I was preparing myself for rejection yet again.  Maybe I was starting to get desperate.  I hoped not.  The offer came back.  Again it was declined, but at least this rejection offered a rationale.  Another offer had been submitted earlier in the day and the seller had already accepted that offer.

At this point, I was beginning to doubt of whether my dream of home ownership would ever come true.  Where was the place I would call home?  Whoever had it, needed to call me…soon.

Tales of a Home Buyer – part 1

May 11, 2011

Written by Shawn DeVries

Let me start by saying that this was not my first time.  Not only have I purchased a home before, but I have obviously been on the selling side of the process.  I have experienced a refinance and even rented for a period in my life.  I now work in the lending industry and know the process of buying a home and what to expect.  Yet, I still experienced the same stress, fear, anxiety, worry, excitement, joy, anticipation and ultimate relief that every other home buyer and owner experiences when going through this process.  My emotional range may have something to do with me doing this as a single buyer this time, but I felt it all just the same.

If you are considering purchasing a home, you may wonder just what this journey is all about.  I thought you might like to know.  If you fully understand this process please don’t disregard this series, for I know you will find warm memories and at the very least some great humor as I relate my story to you.

My story really begins nearly three years ago.  After a divorce I relocated back home to start my life over again.  Let me set the stage very clearly by adding that “moving home” was taken quite literally by moving back into my parent’s house.  Oh yeah, I did it.  God bless my parents, for despite their honest intentions and good will, I really don’t think either of us knew what this would all entail.  Most of my belongings were packed into storage with the remaining pieces finding basement corners and emptied closets.  I was prepared for this journey to start over to take some time, but not quite this much time.  Let the fun begin.  Oh, did I mention I have two children in tow?  (I told you my story would have humor.  Ha!)

Fast forward now through the past three years as I find a new career, pay off debt, and save some money all in preparation of buying my own home.  When January of this year finally came, I was ready to go home shopping!  I thought this day would never come.  I knew to take care of my credit over this time and felt it was in great shape.  I had money set aside for the down payment, plus some for reserves.  I had crunched the numbers and knew not only what I could afford, but what I wanted to afford.  Yes, I am a little anal about details sometimes, but I was preparing to buy a home and I wanted no surprises.

Knowing that the first step in buying a home is to get pre-approved I started by gathering my documents (yes all seemingly 4,000 of them) and verifying the information (just short of the blood work) for my Loan Officer as he prepared to pull my credit report.  Despite having a good clue of what to expect, that 15 seconds between him hitting “submit” and seeing the actual report can feel like eternity.  What are my scores?  Did I really behave?  Will that oops from 5 years ago show up now?  What surprises will he find?  Oh please, oh please let my score be above that golden 640 so that I can shop for a house.  See?  Even people who work for lenders have real emotions and understand the angst our clients endure.

Well the report appeared.  Great scores, good behavior paid off, no glaring marks, no surprises, and above the benchmark score needed.  Whew!  My information was then entered into a program that analyzes the data and based on preset criteria makes a decision on whether or not I could be approved for a loan.  However to the borrower the answers feel like: go away you are only kidding yourself; we had better have someone else take a look at this because we’re not so sure; or yeah, we can do that… provided nothing weird happens.  I was relieved to learn that my information was approved.  My pre-approval was then written and off I went to find my house.  This would be a snap.

Gaining Perspective

February 9, 2011


There are times when you need to view something from a different angle to better understand it.  We tilt our heads when appreciating abstract art.  We walk around a new car to take in all the lines.  We step back when we place an arrangement on the table.  Changing the view gives us new perspective in order to better understand what we are looking at.

 

The same can be said when looking at factors and indicators of the economy, housing sector and interest rates.  We have all heard that interest rates are at historic lows, but just how low is that?  Did you miss out on this recent refinance boom?  Is this refinance boom even over?  Just where are rates right now anyway?

 

Interest rates have been tracked and recorded for the past 39 years.  In that time if there has been one constant, it would be change.  Consider these facts on 30-year fixed rate loans:

 

  • The average interest rate from one month to another has only held unchanged 14 times in 39 years.
  • Interest rates have dropped 2.69 points from 1972 when the average rate was 7.38% to 2010 where rates ended at 4.69% on average.
  • Over the past 39 years interest rates climbed as high as 11.07 points above the yearly average of 1972.
  • Interest rates have dropped as much as 14.22 points since their highest in October of 1981 when that single month boasted rates at 18.45%.
  • The highest yearly average interest rates occurred in 1981 at 16.63%.
  • The lowest rates on record happened last year in 2010 at just 4.69%.
  • Over 39 years the average interest rate was 8.92%, almost double 2010’s yearly average.

So yes, we really are at historically low interest rates!  Yes, this is still a fantastic time to review your current home loan to see if refinancing makes sense for you!  No, you most definitely have not missed out on these low rates!  And yes, it is a fantastic time to buy a home.  Not a bad view from that perspective.  Give us a call to review your current loan or to help you with a pre-approval for your new home.

Repair Escrows – a nice solution

December 8, 2010

What is a repair escrow and why would you need one?

When purchasing a home there are certain expectations and requirements for living conditions that must be met.  Most of these requirements address the overall health and safety of the home.  Different loan programs have different standards.  For example, homes purchased through an FHA or Rural Development program require that any and all health and safety repairs be completed prior to closing on the home.  If you are purchasing a home from a private party this can usually be negotiated, scheduled and resolved before the closing date. 

However, making repairs before the closing date can sometimes create a challenge.  For example, repairing brick work on a home can be a bit of a challenge with a foot of snow on the ground.  A repair escrow can easily resolve this challenge; and most lenders offer this option. 

However, a larger challenge can occur with the purchase of a foreclosure home.  With a foreclosure sale the seller is an institution who most likely has never seen the property.  For liability reasons, the seller does not allow access to the property for repairs to be completed prior to closing.  Plus you may not want to make repairs on a home you do not own yet.  Awareness Home Funding is a unique lender that offers you a repair escrow in this situation also.

A repair escrow is a temporary account with funds specifically set aside to pay for any required repairs that a licensed inspector has deemed necessary, and that must be completed within a certain timeframe.

How does it work?

When an appraisal is done on a home, the appraiser will include repairs that will need to be corrected.  Since the appraiser is not an inspector, he may require an inspection be done for certain areas, i.e., roof, electrical, etc.  The inspector will give a detailed report of the problem(s) that will need to be corrected.

Once you have this list of repairs, 2-3 quotes from a licensed contractor must be obtained for each area of expertise (mechanical, electrical, plumbing, general contracting).  The estimated cost of the repairs will determine the amount needed to set up your repair escrow.

An agreement will be drafted to be signed at close.  Funds for the repair escrow will be part of your cash-to-close.  Repairs must be completed within 30 days from your closing date, unless otherwise noted in the agreement.

What happens next?

After you have closed on your home the next step is to start on the repairs.  There may be repairs that are minimal that you can correct yourself, such as scraping and painting, replacing outlet covers, etc.  Please note:  any repairs that do not pass re-inspection will have to be repaired again, which can cost you more money.  It is always best to hire a licensed professional for any repairs that you are not completely familiar with and know how to handle.

Once all the repairs have been completed, contact your Home Loan Specialist at Awareness Home Funding.  We will request a re-inspection of the work required.  You will need to submit any invoices that are to be paid, which will be forwarded to Polaris Home Funding for payment.  Once Polaris has received the approved re-inspection report, invoices will be paid within three to five business days.  Any funds left over from the repair escrow account will be returned.

Additional Factors

  • There is a maximum limit on repairs of $5,000.
  • Individual bids or a combination of bids for different repairs totaling more than $5,000 are considered major structural and must be completed prior to the closing of the loan.
  • Roof “repair” is acceptable, but roof “replacement” is considered major structural and will not be allowed.

 If you have additional questions on repair escrows or any other home loan question, please contact us at Awareness Home Funding.  We are here to help you.

Ever wonder why you need an Appraisal for your Refinance Loan?

May 6, 2010

It is known that when you purchase a home you will have an appraisal conducted to determine the value.  More specifically an appraiser analyzes the value of your home and property compared to surrounding homes of similar size and style that have sold in the past 6 months.  So why is another appraisal required when you are refinancing your home?

The end result of the appraisal report is a dollar value that is used to determine the maximum amount a lender is willing to loan you.  A refinance pays off your existing home loan and establishes a new loan.  Criteria used to establish a loan for a purchase are much the same for establishing a refinance loan.  Therefore the value of your home and property needs to be confirmed.

Also consider that in the time you have owned your home so far, you have most likely made some changes.  Those changes can add value to your home and property.  Market conditions can also affect your home’s worth.  Are housing prices increasing or decreasing?  An appraisal done for a refinance loan will let you know the amount of equity you now have in the home.  The point is, anytime a loan is established the value of the collateral involved must be determined.

What is a Buyer’s Agent?

May 4, 2010

There are two general types of agency involved with the purchase of a home, the listing agent and the selling agent.  The listing agent is the realtor who has listed the property as being for sale.  The selling agent is the realtor who actually sells the home to the buyer.  In both of these instances, the realtor is ultimately working to sell the home.  This is after all, how they make a living.  However, you can make one simple step to ensure a realtor is working for you the buyer.  Get a buyer’s agent.

A buyer’s agent is a realtor that works exclusively for the buyer.  But there they are also so much more than that.  Only members of the National Association of Realtors can claim the title of Realtor.  And only members of the Real Estate Buyers Agency Council can call themselves an ABR (Accredited Buyers Representative).  An ABR has gone through intensive, specialized training in the process of buying a home. These agents hold to a code of ethics that hold the professional to high standard of conduct.

Having an ABR buyer’s agent work for you can lower your risk of losing money throughout the buying process.  He or she will make recommendations that will assure that you are buying a home that is safe, environmentally sound and priced fairly according to the current marketplace. 

Don’t be surprised if you are asked to sign a contract of commitment for a set period of time to work exclusively with this particular ABR buyer’s agent.  This can actually be a very good thing.  A Realtor does not get paid until the sale of your home closes.  This means your agent is focused on helping you meet your goals, or they won’t get paid.  Now consider that Realtors have information on homes in the marketplace that you the buyer do not, such as the latest homes for sale and price changes.  As a committed client, you will have access to that information first. 

Once you find that dream home, you will want a professional on your side helping you negotiate the finer points of the transaction; handling the forms, contracts and paperwork that needs to be processed; and dealing with any challenges that come along the way.  Don’t let the purchase of your dream home turn into a nightmare.  Work with a professional, Accredited Buyers Representative.  You’ll be glad you did.

You Say it Best

April 27, 2010

“After comparing quotes from 3 mortgage companies, we chose Awareness.  Not only were their fees substantially less, they provided us with great service.  In order to get our home we needed them to work with a tight time crunch.  They were friendly and very easy to talk to, gave us options, and answered all our questions.  When they donated $250 to our church, we were pleased to see how much they care about the community.”  –Carrie

“My mortgage officer at Awareness Home Funding was there for us, answering questions and making sure things ran smoothly all the way through our closing.”  -Lisa

Have you ever watched a commercial where a product or service was given glowing endorsements and wondered if the actor or celebrity was really a satisfied customer?  While the ad creates interest does it instill trust?  Now what if your friend, relative, or co-worker told you about a company and the service they provided.  You would probably be inclined to believe the endorsement.  Why?  Trust.  We trust those we have a relationship with.  We trust those who are like us, and view the world much the same way we do.

This is why we want to share what others have to say about us.  We could just create a bunch of flowery marketing pieces, but unless they share real sentiment it doesn’t carry real value.

We strive to give you our best, to be honest, to work to meet your goals and to keep your interests in front.  We want you to feel comfortable referring your friends, relatives, co-workers, and charity supporters to us.  Growing our business by referrals means we can continue to give back to the communities we serve.  Referrals mean money won’t be spent on elaborate ad campaigns or towering corporate offices.  Referrals mean more $250 donations will be made to your favorite charity when a loan is closed.

Please help us to continue to support your important non-profit causes by referring your friends, relatives, co-workers and charity supporters that might need our help to purchase or refinance their home.

“My home loan specialists at Awareness Home Funding are the most competent, on top of it people that I have ever worked with.  I say this even though I purchased a repossessed home that was in foreclosure and as a result, it had many complications with the red tape and paperwork.  I would recommend Awareness to my family and friends any time.”  -Richard