Do's & Don'ts of Financing

Many believe that once they have found the property they are looking for, or for sellers have a willing and able buyer, the process to closing is easy sailing.  However, since the credit crunch in 2008 a lot of things have changed making the process a bit more cumbersome to navigate and if you don't know the "Do's & Don'ts" leading up to buying or selling real estate, you might find yourself left out.

Lending is thought to be the secondary part of purchasing a property; home/lot/condo. However, for the savvy buyer it is the first part and it starts well in advance of the property search.  For those of you looking to purchase property in the near future the following is a list to follow to make sure your credit is where it should be allowing you to receive the best possible financing:

DO's

• Make all your monthly debt payments- credit cards, mortgage, car payments, on time.  Just because you didn't receive a bill in the mail does not exempt you from having to pay. Missing a payment could cause a big decrease in your credit score and possibly even a loan denial.
  
• The best things come in 2's - You will be asked to provide 2 years of tax returns, 2 years of W2's, 2 months of bank statements and 2 pay stubs.  Depending on the loan type you are applying for this may vary but it is a good starting point.
  
• Be careful of co-signs - Anything you co-sign for; school loans, installment debt, real estate loans, etc. can cause you to lose purchasing power.  Lenders will count the full portion of the loan against you!  This means that if you and a friend purchase a second home (vacation home) and then you decide you want to buy another home to live in you will have to qualify for the new loan AND the full payment of the second home you purchased jointly with your friend.  It is possible to get an exception so talk to your lender.
  
• Be Patient - Obtaining a loan is a process but if you have the right lender it is not as bad as some of the stories you may have heard. The right lender will walk you through this process and make it as efficient as possible.  A closing may take from 45-60 days to complete so be sure to discuss this with your lender and Realtor prior to finalizing a closing date on your offer.
  
• Remember, your words means a lot but you will still have to justify the things you say so be able to prove it and don't be offended.
  

Don't...

• ...open any new credit card during your loan process unless you have discussed it with your lender prior.  Doing so may significantly hurt your chances of obtaining the loan you want.
  
• ...purchase a new car prior to purchasing a home.
  
• ...make any large deposits into your accounts you plan to use for financing as this can raise red flags with underwriters and they will ask that you provide proof of where the funds came from if it's out of the ordinary.
  
• ...retire then decide to purchase.  Talk to your lender beforehand to make sure you will be able to purchase based off income and/or assets.
  
• ...delay closing for months as this will require more paperwork and scrutiny.  Get your information to your lender in a timely fashion to ensure a smooth, efficient process.
  

These are but a few of the more common 'Do's & Don'ts' that can help or hurt your ability to purchase the property of your dreams.  There are others so be sure to ask your lender all the questions you can think of and remember to ask even if you think its not that big a deal.  That little something maybe the one thing that keeps you from getting the home you always wanted.

For more information about the real estate process, values of properties in the Hilton Head Island area or Hilton Head Island and Bluffton real estate contact PNP Real Estate at 843.338.6737 or email [email protected]

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