The easiest way to eliminate the stress of buying a new home is to have a clear understanding of your buying power, or how much you can afford. When you know that, you can focus on looking for homes that are right for you - and within your budget. You can start by looking over your finances. Compare the amount of debt you have to the amount of income you receive and try to come up with a payment, including taxes and insurance, that you would feel comfortable with.

When we review your application for a home loan, we consider two key factors:



We determine your ability to repay a loan by verifying your current employment and total income. Mortgage companies generally like to see that you've been employed at the same place for at least two years or that you have been in the same line of work for a few years.

We determine your willingness to repay a loan by examining your previous financial commitments, or in simpler terms, looking at your credit report. Also, how you intend to use the home makes a difference. You might be looking for a home to live in, a home to rent to other people, or a second home in your favorite vacation spot.

Despite our standard methods for determining ability and willingness to repay a loan, we want to emphasize that we approach every loan application on an individual basis. We'll look at all of your circumstances before making a decision, so your stronger points can outweigh your weaker ones. Remember, we want to assist as many buyers as possible, so we'll do our best to review all aspects of your application before making our decision.

Once you have an idea of what you can afford, you're ready to apply for a home loan. Remember, you don't have to wait until you find the right home to apply for a loan. In fact, we recommend that you apply before you begin shopping. If you're pre-qualified for a home loan before you start looking, you'll have a better idea of which areas you can afford, and as a pre-qualified shopper, sellers will know you're serious about buying.

To help you begin, we've created What You Need to Apply Checklists to let you know what information you'll need to apply for a loan, and an online application online application.

Your loan approval process generally begins with a simple meeting in which I get to know more about you. At this time, we'll discuss your goals for the loan, what kind of payments that you are comfortable with, etc. If you haven't completed our online application, please review the information found in our What You Need to Apply Checklists. You'll need to bring the following to your initial meeting:


Your application can be processed much faster by bringing the documents listed above with you when we meet.

After our initial meeting, you'll have a good idea whether you qualify for the type and amount of loan you want. Within a few days, I will let you know if you're approved. If your loan application is denied, I will explain why, and discuss any alternative lending options with you.

After processing the information from your application, I will explain the various types of loan programs that you qualify for. After we've discussed and determined which loan program is best for you, I will provide you with several disclosure documents, including:


You may also receive additional disclosures at that time. They can be viewed here.


Locking In Your Interest Rate

Depending on market conditions, you may prefer to "lock in" your interest rate immediately while you shop for a home, or wait until you're almost ready to close on your loan.

Be sure to ask how far in advance you can lock a guaranteed rate - a longer lock period may affect your costs.

As always, if you have any questions, contact me, and I will be happy to help you with this and all other stages of the home buying process.

Even if you're not a "shop-a-holic," finding a home can be a fun, exciting experience! You might choose to begin by looking at homes listed on the Internet. Perhaps you prefer to actually drive around your favorite neighborhood and look at the houses for sale, or you might prefer to work with a real estate professional. However, you may be very industrious and do all of the above! (Use the following information as a general guide, as many states have different requirements and laws pertaining to home sales.)

Using the Internet

The Internet has definitely helped prospective homeowners like yourself quickly and efficiently find homes that are right for you! With just a few simple searches, you can easily find hundreds of houses in your area or across the country that are for sale. Most Web sites that list homes provide maps, tax information for specific areas, school district information and school locations, crime statistics, and some even provide a virtual tour or photos of the home to view from the convenience of your desk.

Driving Around

If you prefer to look for homes the old-fashioned way, simply hop in your car and start driving around your favorite neighborhoods to look for available homes. You might be surprised at what you drive by every day that you may not have noticed prior, and at what new areas you'll discover when you slow down and really start looking.

Contacting a Real Estate Professional

If you haven't contacted a real estate professional in your area, you might consider looking for one. Real estate agents are licensed professionals who can help you save both time and money, and can provide a list of homes with the features you can't live without - whether it's a fireplace, double garage, or a swimming pool. An agent can save you time by only showing you homes within your budget and that have the features you want, and/or need.

Some may ask you to sign contracts stating that they can represent you exclusively for a certain number of days or months. Remember, you're trying to make a business transaction, potentially the largest one you've ever made, so you want to be comfortable with the real estate professional you're working with.


Making the Offer

You've applied for a home loan, obtained a pre-qualification, and found your dream home. Now it's time to make an offer!

Submitting a Contract

When you're ready to make an offer, you'll submit a contract, which will be reviewed by the seller. The contract will include your offer price, as well as your contingencies, which will help protect your interests. Contingencies are requirements that must be met in order for the sale to go through. You might want to consider including the following contingencies:

Home must pass inspection: if the home inspection reveals faults in the home, you'd have the right to back out if the owner won't make repairs, if the repairs exceed a specified limit, or if the repairs can't be made
Repairs must be made to your satisfaction: if the seller agrees to make repairs, which turn out to be unacceptable, then you would be able to back out of the contract
Financing must be approved: if something were to happen to your credit, or you were not approved for a home loan, you would be able to back out of the contract

In addition to the contract, you'll also need to present an earnest-money check, which will only be cashed when the sales contract is signed. Earnest money is like a deposit; it lets the seller know that he or she is entering negotiations with a serious buyer. The earnest money is held by a third party in an account often called an escrow account, and the money will be applied to your closing costs.

Though earnest money guidelines vary, this is generally how it works:
If negotiations break down before the contract is signed, you will be returned your original earnest-money check. Likewise, if the contract falls through because the seller does not meet your requirements, you will also receive your original check back; however, if you back out of the contract, or fail to meet the seller's requirements, you will lose your earnest money.

If your contract contains an offer that unacceptable to the seller, or includes contingencies the seller wants to change, then you and the seller will begin negotiations. Basically, your offer contract will be changed to meet both your and the seller's requirements. The seller might be willing to lower the price of their home, but not as much as you originally requested. Depending on the market, the seller might be willing to negotiate with you. Most important though, if and when you do reach an agreement, you'll be ready to close the deal.

More on Negotiating

Most homes are sold for less than their asking price. If you're working with a real estate professional, he or she will be the person who helps you decide what to offer, and will deliver your offer to the seller. If you're buying directly from the owner, you'll be negotiating on your own.

Your ability to negotiate with the seller will depend on several factors:

Condition of the home: if the home requires repairs, then you might want to use the estimated cost of those repairs to lower the asking price or request the seller make the repairs before you close the deal. (Repairs may be mandatory, depending on your loan's features.)
Current market: depending on the current market, buyers or sellers may benefit. For example, in a buyer's market, more homes are available than people who are looking to buy, so you are more likely to succeed in negotiating a lower offer. On the other hand, a seller's market means there are more people looking for homes, than there are homes for sale. In this situation, you'll likely have to make an offer that is close to the seller's asking price, especially if several people submit offers to the seller.
Seller's motivation: if the seller needs to relocate quickly, or buy a larger house for a growing family, he or she may be willing to accept a lower offer.
Seller's equity in the home: sellers who have little equity in their homes may be less willing to accept low offers because they don't want to lose money in selling at lower prices.