Purchasing a luxurious home can be a dream come true. But before you set off on your journey to home ownership, local experts have crucial advice to ensure the process doesn't turn into a nightmare.
Prior to your house-hunt, local lenders say it is critical to meet with a trusted loan officer to achieve smooth and seamless transitions throughout the home-buying transaction. Because, as Doug Schukar of USA Mortgage cautions, the rules have changed—and borrowers have to do their homework. “You used to be able to meet with a lender and get a house,” he explains. “But there have been so many changes in mortgage agencies that are mandated by the government. You need to do a crash course in what products are out there now.”
Area mortgage agencies offer a range of loan products, from conforming loans—those which are $417,000 or lower and meet GSE (Fannie Mae and Freddie Mac) guidelines, to jumbo loans—$417,000 or higher. “A lot of people think you need 20 percent down when buying a million-dollar home, and that’s not the case,” says Steve Strick of Gershman Mortgage. “There are multiple programs that allow people to put 10 percent down.” And for first-time home-buyers, there are even more options, including no money down or a 3-percent down-payment. “We’re able to get creative because of the relationships we have with our investors,” Strick adds.
It’s also important for potential homeowners to avoid getting their heart set on one particular dream house upfront. “Say you spot a $1-million home you like, but you only can afford a $500,000 house,” Schukar notes. Strick agrees, noting that it is paramount to first find out the home loan amount for which you qualify. Once your financial target is established, it is time to move forward with a dependable lender on all of the necessary paperwork. “The process itself has gotten more frustrating for well-to-do borrowers. Standard paperwork no longer closes the deal,” Schukar warns. The lender now has to investigate everything from your credit score and standard income to alternate forms of income. “Your lender now has to get a 4506-T form—a transcript of your taxes,” he adds.
Red flags that warrant further digging for lenders can range from mortgage rate payments to judgments and collections. To avoid pitfalls that may block the road to home ownership, Strick says borrowers should not change jobs during the home-buying process or make other big-ticket purchases, such as a car, or furniture for the yet-to-close house. Additionally, your mortgage agency can advise you positive steps forward, like boosting your credit score. “We go out of our way to fix financial hiccups,” he explains. ‘We understand that life happens and people’s credit may have dropped during the economic downturn.”
While the process has become longer and stickier, Schukar still says now is a great time to begin the trip toward your dream home. “We’re in an unbelievable market, so it is certainly the time to be buying.”