Why Mortgage Process Is Biggest Home Buying Stress


Why Mortgage Process Is Biggest Home Buying Stress

This BLOG On Why Mortgage Process Is Biggest Home Buying Stress Was UPDATED On April 21st 2018

By Gustan Cho

The home buying process can be both exciting and stressful at the same time. The mortgage process is often the stressful part of the home buying experience.

  • It can be much more stressful with a first time home buyer than a veteran home buyer
  • There are many new rules and regulations with the mortgage lending process that even seasoned homeowners
  • The mortgage process can be stressful if the home buyer chooses an inexperienced loan officer
  • Buying a home is not like buying a car or other high ticket items
  • The home buying process can be extremely stressful, especially the mortgage process with a lender with many lender overlays
  • The home buying and mortgage process can take anywhere between 30 to 45 days
  • There can be delays with closings
  • Things that can cause delays in closings are if the appraisal comes in too low
  • Or if there are issues with the home inspection
  • Or if there is a cloud in the title of the home
  • There are many things that can go wrong during the home buying process
  • But in general, the issues that arise during the home buying process normally gets resolved

Reasons Of Stress In The Home Buying Process

Everyone has different ways with dealing with stress.

  • Most folks do not purchase many homes in their lifetime
  • With each home purchase, it is a new process
  • There are home buyers that get extremely emotional during the home buying process
  • Some home buyers cannot take it and end up canceling the purchase contract
  • They often end up regretting it after they cool off
  • There are many individuals involved in the home buying process
  • There are many actors in the home buying process:
    • buyers
    • sellers
    • buyer’s realtor
    • seller’s realtor
    • mortgage team
    • insurance agent
    • attorneys for both the buyer side and seller side
    • appraiser
    • home inspector
    • third party vendors

Home Sellers

Sellers can get emotional selling the house they have considered their home for many years and where they have raised their kids and family.

  • Sellers can many times become unreasonable when it comes to repairs
  • If a home appraiser comes back with items that need to be corrected in the home so it meets mortgage lending guidelines, the seller normally fixes it
  • Same thing goes with a home inspection
  • Most home buyers order a home inspection
  • There are times when a home inspector will come back with items that have issues or defects
  • Many times some sellers can be very unreasonable and feel that they are giving the house away and will not spend a dime
  • Take this attitude with a nervous first time home buyer and the end result is not good
  • Both the sellers and home buyers need to be open minded
  • All parties in a real estate transaction need to work together to make the transaction work

Low Appraisal Issues

Most homes are priced correctly. But there are times when an appraisal comes in lower than the purchase price.  This can add home buying stress for both the home buyer and home seller.

  • Low appraisal issues needs to get resolved
  • It needs to be resolved either via an appraisal rebuttal or the seller reducing the sales price to the appraised value
  • Or re-negotiating the purchase price somewhere in the middle
  • Or the home buyer purchasing the home above the appraised value and at the agreed upon purchase price

Pre-Approval And Purchase Contract

The home buying process first starts with home buyers getting qualified for a mortgage. The pre-qualification and pre-approval stage of the mortgage process is the most important part of the overall home buying process. A loan officer should never issue a pre-approval letter. All of our pre-approvals at Gustan Cho Associates Mortgage Team are issued by our underwriters. Our underwriters will fully underwrite a borrowers file and sign off on a pre-approval letter. Home Buying Stress can be avoided by borrowers getting issued an iron clad pre-approval by a mortgage underwriter. The number one reason for home buying stress and last minute mortgage loan denial is due to a loan officer not properly qualifying borrowers.

  • A pre-approval is the most important stage in the mortgage approval process
  • The home buyer needs to complete a 4 page mortgage loan application
  • The mortgage loan officer runs credit
  • The home buyer needs to provide the mortgage loan originator documents such as the following:
    • two years tax returns
    • two years W-2s
    • recent paycheck stubs
    • 60 days bank statements
    • letters of explanations
    • other credit and income docs
  • Mortgage loan originator will then run the mortgage application package through Fannie Mae and/or Freddie Mac Automated Underwriting System
  • Once it renders an approve/eligible, the loan file needs to get processed and underwritten
  • Once the underwriter underwrites the file, the underwriter then issues a pre-approval letter

Home Buyers should never enter in real estate purchase contract without a pre-approval letter signed off by a mortgage underwriter.

Real Estate Purchase Contracts

The home buyer then shops for a home with a realtor and enters into a real estate purchase contract.

  • Signing contracts does not have to be stressful
  • The real estate contract is probably about a dozen pages
  • Most home buyers get stressed just reviewing it because it is worded in legal terms
  • To relieve home buying stress, have the realtor go over line item per line item
  • Have the realtor explain to in layman’s terms what each paragraph means prior to signing it
  • Basics on what is written on the real estate purchase contract is the following:
    • date
    • purchase price
    • down payment
    • contingencies such as appraisal contingencies and home inspection contingencies
    • sellers concessions if any
    • mortgage contingencies
    • closing date

Once a purchase offer is submitted to the seller, it may be an hour or several days before the seller accepts the contract or comes back with a counter offer.

  • Buyers buying a short sale home or a foreclosure, it may be weeks before the seller, which often times is a lender, comes back with a counter offer
  • This waiting period can be stressful

Mortgage Approval Process

After buyers entered into a real estate purchase contract, the mortgage approval process begins.

  • The mortgage approval process does not have to be stressful if mortgage loan originator collects all data upfront and the mortgage loan application is processed correctly the right way
  • A good loan processor will ask for every information and documents a mortgage underwriter will condition for after the conditional approval
  • A conditional approval is a loan approval that is valid if the conditions are provided to the underwriter
  • If processor submits every possible information and does not miss any documents such as the following:
    • 2 year tax returns
    • 2 years W-2s
    • 60 days bank statements
    • recent pay check stubs
    • divorce documents if applicable
    • bankruptcy documents if applicable
    • child support documents if applicable
    • other pertinent documents
    • letters of explanations
  • The more information and the more cooperation borrowers give loan officer initially, the less home buying stress they will have

Other Stressful Tasks In The Home Buying Process

Scheduling movers, trying to sell furniture, buying new furniture, changing schools for children, and getting familiar with the new community along the mortgage approval process can be part of good home buying stress:

My advice is to speak to friends and recent family members who recently went through the home buying process and see how they coped with it.

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