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 off completely or down, 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.
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). 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 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.