Understanding the Home Financing Process – Seven tips for buyers on working with a lender
Buying a new home is one of the biggest events a person will experience in life. It requires researching neighborhoods and builders in a desired area, locating the parks, schools and/or nightlife that matter most, saving for a down payment and so much more. But once those decisions are made, is it as simple as signing a purchase contract and hiring a moving van a few months from now? An important component of the overall learning curve required to ensure (mostly) smooth sailing and an on time closing on a new home is the strength of the relationship between the lender and the customer.
Because most people don’t pay for homes with cash, one of the first steps to purchasing a new home is to work with the builder’s preferred lender to obtain a “pre-approval.” Once the lender has issued this, the builder then moves forward with providing the purchase contract to the buyer and breaking ground on the home. Still, even after this milestone, it is critical to follow certain steps, procedures and “rules,” if you will, to keep the loan approval throughout the duration of a lengthy escrow.
MBK Homes works with New American Funding as its preferred lender. It is important for companies like MBK Homes to work with lending professionals who can guide our clients through the complexities surrounding the purchase of a new home. A new home purchase is different than a resale and Gigi Renick, New American Funding’s Vice President, has been shepherding MBK Homes’ clients through that process for many years. She and her team are currently working with us on Vineland Metro, our new single-home community in North Hollywood.
Following are seven useful tips from Gigi on how buyers can work with a lending team to obtain the best financing (or “loan product”) for their dream home.
Tip #1: Remember that working with the right lender is NOT about getting the lowest rate in town. You’ll see ads for incredible deals online and on billboards, but be wary! The right lender will be there for you to take your 10:00 p.m. call and to help you weather every storm. Online “chat” assistants will not be.
Tip #2: Get it all out on the table fast. In your early communication with your lender, be clear and forthright about your recent job history, your debt, your intentions for occupying the home, and so forth. Painting an accurate picture from the outset will help you avoid future pitfalls.
Tip #3: Keep your accounts static. Determine which accounts you’ll use to pay your deposit, your down payment, for your options and upgrades, for your appraisal, and so forth. Leave these monies be and don’t go adding any large, un-sourced deposits of any kind! All funds must be seasoned.
Tip #4: Protect your FICO. Seriously—don’t go financing a boat or purchasing another home. Avoid late payments like the plague (this is good practice whether you’re in escrow or not). You’d be surprised how easily one chink can tank an otherwise great score.
Tip #5: With that said, if your credit could be better, know that the right lender will help you get there! Most credit companies provide optional diagnostics that show how paying down certain debt, getting an old account removed, and so forth can make considerable improvements to your score.
Tip #6: Lock your rate. Folks, rates are rising in today’s market. Obviously locking or not locking is ultimately your decision, but more than likely it will be in your best interest to lock earlier than later. Work on the timing with your loan consultant and once you commit, don’t look back!
Tip #7: Communicate, communicate, communicate. I encourage our customers to copy every member of my team on all email exchanges, in particular. We have different experts in our group, and someone is always ready to jump in and help immediately. Keeping everyone in the loop helps us get that done and keep you safe at harbor.
Purchasing a home is one of the most exciting things in life. Just be smart, practice good financial habits, and be sure when it comes time to buy that you select a builder and a lender who have your best interest at heart.
Happy buying, friends!
**** For information on Los Angeles theatre, tickets to theatre in North Hollywood’s NoHo Arts District, theatre reviews, the NoHo Event Calendar, restaurants, news and local businesses in NoHo, or anything and everything about the NoHo Arts Community, bookmark nohoartsdistrict.com.