Posted by: Thomas Perrella | June 14, 2011

3 Absolute Musts for Buying a Home – Without the Stress!


Major money transactions are stressful. Moving is stressful.  Big life  commitments are stressful. Put ’em all together, and what do you have?  The home buying process (and the potential for one of the most stressful life experiences you’ll ever have)!

But even in this volatile market  where distressed properties – and people! – are commonplace, it is possible to maintain your sanity in the midst of a real estate deal – I promise.

Here are 3 money, mindset and calendar management strategies for buying a home, without stressing entirely out.

1.  Work the Boy Scout program: be prepared. Scrambling for money and documents that the lender, unexpectedly, “requires” to  close has got to rank up there in the top couple of stressors that  buyers experience. Once you get into contract and, especially, once  you’ve removed contingencies and put your deposit money on the line,  every request that your lender makes seems like a ransom demand for your home – and your life, as you’d planned it.

Avoid this scrambling by being prepared. If you are planning to buy a home  down the road, consult a mortgage broker and real estate pro early on in your planning process, so you can know what kind of cash you’ll  realistically need to close the deal – before you start the buying process. You might keep hearing about 3.5% down FHA loans, but your local pros can reality check you that it might cost an addition 5 or 6% of the purchase price just to close such a loan, in your area and price range!

If they give you a range, err on the  high side – penny-scraping buyers are generally the most stressed of  them all, as they are the ones whose deals are most likely to be  entirely derailed if there’s an uptick in interest rates, say, during  the time they are house hunting or in escrow, or if the homeowners’ insurance costs a bit more than they planned.

And have all your documents ready, too – things like divorce decrees, tax  returns, updated check stubs, documentation of bills that you’ve  recently paid down or off , even driver’s licenses (you wouldn’t believe the number of people who can’t produce ID when the notary needs it at  the closing table!), keep all these items at the ready in case your  lender requires them. By the same universal law that renders my dogs  smarter and faster the wetter they get, it seems like lenders require  the most documentation of the folks who have no idea where their most important papers  are.

Last, but not least, there’s also an education element of preparedness.   Educate yourself about the standard practices and timelines for a real  estate transaction in your local market (your agent will surely be able  to brief you on this, and you can also peruse Trulia Voices Community to sample the experiences of other folks buying right now in your area.)   If you’re buying a bank-owned property or a short-sale, educate  yourself about what this will entail – spend some time reading up on the rollercoaster of Wild Westiness (a mixed metaphor, I know, but still  appropriate) that some distressed property sales can be, from the  buyer’s point of view.

When it comes to buying a home, realistic expectations will set you free.  Stress-free, that is.

2.  Keep your timelines as flexible as possible, as long as possible. Rarely does the sun set in America without some homebuyer (or 5) near you  lying awake in bed wondering how long they’ll have to:
a) keep bunking with their in-laws,
b) keep paying the nightly rate for the all-suite hotel down the street from the place         they’re buying,
c) keep paying the daily fee for the moving truck which is parked outside,
containing everything they own,
d) keep begging their landlord to please, please, please give them  another 24 hours
– and they swearing they’ll be out after that (even though they said that
yesterday!),
e) keep pushing back the vacation days they took off work for the move that seems         like it will never happen, or
f) some combination or all of the above,

all because their escrow is not closing on the timeline they expected it to.

There are as many reasons for late escrow closings as there are insomniac  homebuyers facing this issue: buyer’s loan underwriting is taking too  long, seller’s short sale application is still being processed,  appraisal is glitchy, bank-owned property asset manager is slow to  produce the necessary signatures, and the list goes on.

More important than knowing the causes, though, is having the awareness that escrow closing dates are not set in stone until the end is very, very  near – and that the problem of delayed closing comes up with  ever-increasing frequency these days. Buyers who are trying to time  their closing so that they move out of their apartment on the exact day  they plan to close are likely to be disappointed – and temporarily  homeless – in the current market climate.

Best practice is to plan on  some overlapping days, weeks or even a month between the time you should be able to move into your next home, and the time you must be out of  your current home, if you can afford it. Keep your moving plans  flexible as long as possible – I’ve know a number of buyers who didn’t  realize their move would be delayed until they were signing their  closing docs!

Also, it’s sanity-making to try to keep some flexibility about your daily  calendar while you are in escrow, lest you need to show up at the  property and get some additional inspections, unexpectedly, which were  recommended by your inspector.  If you only have a couple of days before you must remove your inspection contingency, you might have to drop  everything and stop in at the place for an hour here or there.  You  might also need to stop in at the bank – in person – to wire cash when  it’s time to increase your deposit or pay your down payment or closing  costs into escrow. This cannot usually be done over the phone or outside of banker’s hours, so if you can be a bit flexible for these outings,  calendar-wise, you’ll be in good shape.

3.  Pre-approve the folks across the bargaining table from you.  There’s nothing worse than doing every thing you’re supposed to do, then having the deal fall apart at the last minute, through no fault of your own.  I’ve known scores of buyers whose short sales failed to get approved by the  seller’s bank and fell out of escrow as a result.  I’ve also seen and  heard from buyers whose deals died when their intended properties failed to meet the buyer’s mortgage guidelines because of condition problems  like incomplete kitchen remodel jobs, mold or electrical problems and  high-cost pest report items that neither the buyer nor the seller can  afford to repair.

These ailing transactions can be prevented by early diagnosis: vet the other  party’s qualifications and ability to close the deal, before you get  into contract.  For buyers, this can mean having your agent collect as  much information as possible about the seller’s equity position, how  underwater the home is, which banks are involved and how successful the  listing agent is at closing short sale transactions – all of these  things can give your agent and yourself a big old clue as to whether a  short sale is likely to close.  Similarly, if you’re getting an FHA  loan, before you make an offer, walk through the property with your  agent and troubleshoot it for condition problems that might come up  during the appraisal.

With this information you can make an informed decision whether to move  forward and try to buy the place; if you get into contract knowing it’s a crap shoot, at least you’ll have realistic expectations – the sort that are very difficult to disappoint.

by Tara-Nicholle Nelson Trulia.com

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