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Knowledgeable
Homebuyers Plan Rather Than React
By Alvin Thomas
Real Estate Columnist
The following scenario occurs all too often on the streets
of Toledo: Jack and Jill are frantically speeding down
Parkside Avenue, no doubt going somewhere extremely
important, and suddenly Jack slams on the brakes and throws
the gearshift into reverse. He stares out of his car window
in amazement and says to Jill “Baby, look at that!” His
wife, Jill, turns to see what has mesmerized her husband and
suddenly she becomes motionless—spellbound. They both sit
captivated.
Outside their window stands a huge, white colonial home
guarded by four towering majestic pillars resting on an
expansive front porch and a for sale sign seemingly flashing
of neon in the yard. Bam! This is their dream house, and
they want it now. They simultaneously close their eyes and
telepathically share the same daydream. They picture
themselves swaying peacefully in straw backed rocking chairs
perched on the front porch while their two children romp
gaily in the abundant, lush front lawn.
Abruptly, Jack and Jill are rudely awakened from their
trance by the honking horn of the car stopped behind them.
As their illusion fades, their senses return. They realize
that since they are racing to their attorney’s office to
file bankruptcy, this is probably not a good time for them
to look at buying a home. Unfortunately, far too many
Toledoans share this experience of a dream turned nightmare
by allowing the home buying experience to become a knee-jerk
reaction rather than a well thought out planned goal.
Until they drove by that charming colonial home, Jack and
Jill had no immediate intentions of buying a home. They had
given the idea absolutely no forethought. That’s not even a
good way to buy shoes, let alone a home. During my many
years as a mortgage loan officer, I’ve heard countless
stories like Jack and Jill’s. Unfortunately, because these
potential homebuyer’s decisions to apply for a mortgage loan
to purchase a home are made as a mere impulse triggered by a
nice home that caught their eye, many stories like Jack and
Jill’s sadly end in a loan denial.
Under any circumstances, buying a home can be a madding
experience, but there is a universally prescribed method to
eliminate most of the madness. The following four steps will
demonstrate a more deliberate and prudent approach to the
home-buying process that typically ends with new happy
homeowners.
The first step is to take as much suspense as possible out
of the home buying process by meeting with an experienced,
competent mortgage loan officer you trust to be
pre-approved. In fact, most realtors will not work with
homebuyers unless they have a pre-approval letter in hand.
There is already plenty of stress associated with purchasing
a home so let start by reducing the suspense.
After meeting with the loan officer you should know how
large of a mortgage you can qualify for and how much, if
any, cash you’ll need for your down payment and closing
costs. Part of the approval process includes actually
documenting that you have the cash necessary required to
purchase a home.
However, if your loan officer informs you that you are not
currently qualified for a mortgage loan, he should also
provide clear direction as to how you can resolve the
challenges. Many of the issues that temporarily prevent
buyers from qualifying for a mortgage loan such delinquent
credit, insufficient funds or excessive current obligations
can resolved in a relatively short period, clearing the path
to purchasing a home in the near future.
The next step is probably the most fun and, possibly, the
most stressful. Assuming that you receive a pre-approval
from your loan officer, it’s time to shop. It is at this
point you should decide the particulars of the home you want
including its location and amenities. I strongly recommend
that you hire the services of a realtor during this phase. A
good realtor will provide you with information regarding
schools, pricing trends, neighborhood characteristics and
negotiate the terms of the purchase on your behalf. In
addition, for you, they’ll work cheap because you don’t have
to pay them. Realtors are normally paid by the seller.
The third step is potentially the lengthiest phase of the
home-buying process. This is when buyers and sellers,
parties with conflicting interest, must come to an
agreement. This is when realtors really earn their keep.
At last, the great day arrives. The day that dreams
magically become reality is called the closing. It in the
closing that the final loan documents are signed to transfer
ownership of the property and loan documents including the
mortgage is given to the lender.
Then, Bam!
After the implementing the plan outlined above, even Jack
and Jill can become homeowners.
Alvin Thomas is a mortgage loan officer with over 20 years
of banking and mortgage lending experience. He can be
reached at:
alvin.thomas@noic.com or (419) 885-8300 ext. 150.
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