Buying a home is a lot of work; I won’t kid you. If you search among your family and older friends you will find a couple that have never purchased a home though they are in their fifties or sixties. Quite possibly they faced the challenges of that first transaction and just gave up.
You will be asked to meet people, sign documents, obtain records, and other tasks any of the seven days of the week, holidays included, right up until escrow closes. Some of the tasks may seem odd or disconnected. Don’t pass judgment. Just get them done.
Here are some real transaction examples:
1. Write a letter explaining why your parents waited until you were three months old before obtaining a social security number.
2. Write a letter explaining why your parents obtained a social security number
for you at birth instead of waiting.
3. Explain why you became a Dentist after going to Dental school for four years.
4. Please have the wife from whom you are separated write a letter explaining
why she quit her job in March and what she plans to do for work now.
5. Have your Commanding Officer write a letter explaining your potential forcontinued enlistment and whether you will be promoted in two years.
6. Please provide all pages of your tax returns for the past five years.
7. Have a Certified Public Accountant draw up a mid-year accounting of your cash flows, balance sheet and profit and loss for the year to date (this is in February.)
These are all real case file requests. You can see that the list could go into infinity and beyond as the Buzz Lightyear’s in loan processing gather what they need for a successful assault on the moneylender’s doorkeeper – The Underwriter.
The Processor’s job is almost an art. Let me explain why. They must give the Underwriter everything they need to get the loan approved. But, each item they give the Underwriter provides another peek at who you are and has the potential for raising other questions. These are questions that, at the very least, you don’t want to spend the time writing yet another letter of explanation for. At the most, could cause the loan to be denied. For this reason, the Processor will hold back on asking you for some items in the hopes that the Underwriter will not ask for them in turn. Later, maybe MUCH later, they will ask for them and your first question is, “I can’t believe you are only asking for this now, so late in the process! Why didn’t you ask for this before?”
Again, let them perform their art. Just get them what they need as quickly as you can when they ask for it.
When things get really tough you may start to question the qualifications of the players in this incredibly challenging game. Almost every time, and especially on this your first home, PLEASE remember you are the least experienced member of the team. Most, if not all, of the other players have been at their jobs for years and handled hundreds or even thousands of transactions. Like you, this is also true about your parents, your Uncle Louie, and your Cousin the Licensee who has done three transactions in six years for other family members. They are more experienced than you, but not by much. The only exception may be your Realtor or the seller’s Realtor and we will discuss that in Chapter Four.
Here is how to play it when confusion or frustration sets in. Smile, sound friendly, ask how their day is going and then as questions until you are satisfied that you understand. Over my years in the business, once even physically, I have seen files get “lost” for days or weeks. When you push a Processor or Underwriter, they can choose to categorize you as a PITA, Pain In The A… and suddenly all the help you need, your place in the queue of loan files on their desk, and their desire to be your buddy are all gone. It was said, ney sung, best in the play/movie Sound of Music: “A spoon full of sugar helps the medicine go down.” Trust me, most of the Buyers these people work with are troublesome and don’t appreciate what is being done for them. If you are nice, courteous, and patient they will dance for you. And if you are using a Realtor, don’t turn them loose on the same people. The Realtor usually cannot help the process very much.
Encouraging Escrow and Lending along is an art. Just the right amount of push can be helpful. Like this. “Hi Melanie. It’s Jacquie Smith. We’re buying the home on Starbright Circle. How are you today? (Pause and wait for the answer.) I was just wondering is there anything else I can get for you that would help you?”
Here is how not to do it. “Is this my Processor? We’ve been in escrow for six weeks. Why isn’t my loan approved yet? Why is this taking so long? Don’t you have enough help there? If you don’t think you can do this then we will just have to get someone else.”
At the very end of the process the Lender’s people may be able to provide extraordinary help for you. It is then that you want them to remember you as “those nice people” because what they do can affect you financially and emotionally.
I have seen people that have absolutely no right buying a home get upset about requests for information. They had a bankruptcy three years ago, followed by more late payments, they are behind on their child support, have a 42/59 debt to income ratio, own three cars for two people (all on payments) and $120,000 in student loans. Then THEY get upset when the processor asks for two years of tax returns. Be honest with yourself about your qualifications. If your situation is a little tricky, you should be very grateful that these hard working folks are working even harder to get you qualified.
Just for a moment, I want to show why you should appreciate the United States of America. An acquaintance of mine sells foreclosure real estate to Europeans. He was giving an evening seminar in Germany and started talking about 30-year fixed-interestrate loans. A man jumped up and shouted, “HE IS LYING! THERE IS NO SUCH THING!” The speaker calmly asked, “Do you know anyone in America that owns a home?” The heckler said, “Yes I do.” The speaker, “Do you have a cell phone on you? Then call and ask them” – and he did, right then and there. After hanging up, the heckler yelled, “HE’S A GENIUS!” and sat down.
There are very few countries in the world where you can get a fixed rate loan. Fewer still with interest rates where ours are. Practically none that permit a low down payment like our FHA program. In many countries you have to pay cash for the home. Maybe you can get a 50% loan. In a small percentage you can get a 75% loan. Families save for decades to buy a home. But, you live in America.
Also our quality of construction, the variety of homes from which to choose, the types and variety of floor coverings, fixtures, moldings, windows, furniture, draperies, and the list goes on, are the best in the world. Though our city building inspectors are expensive and tough, it has lead to some of the highest quality homes in the world. Your ability to express appreciation for all the players in this process will go a long way toward a successful transaction for you.
You can obtain great strength for this effort by knowing what you want in a home . . .
<<Introduction Chapter 2 >>