By Gustan Cho
The home buying process can be both exciting and stressful at the same time. 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 can go through a very stressful time during the home buying process. Buying a home is not like buying a car or other high ticket items. It is a process and the home buying process can be extremely stressful, especially the mortgage loan approval process. The home buying process can take anywhere between 30 to 45 days. There can be delays with closings as well in the event 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 homes too many times so with each home purchase, it is a new process. There are home buyers that get extremely emotional during the home buying process that they cannot take it and end up canceling the purchase contract and end up regretting it after they cool off. There are many individuals involved in the home buying process. You have the buyers, the sellers, the buyer’s realtor, the seller’s realtor, the mortgage lender, the insurance agent, attorneys for both the buyer side and seller side, the appraiser, the home inspector, and many third party vendors.
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 and 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 and 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 extreme stress for both the home buyer and home seller. Low appraisal issues needs to get 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 after a home buyer gets a pre-approval. A pre-approval is the easiest process in the mortgage approval process. To get pre-approved, 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 a few documents like two years tax returns, two years W-2s, recent paycheck stubs, and 60 days bank statements. Mortgage loan originator will then run the mortgage application package through the Automated Underwriting System and once it renders an approve/eligible, a solid pre-approval is issued.
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 is stressful. The real estate contract is probably about a dozen pages and most home buyers get stressed just reviewing it because it is worded in legal terms. To relieve the stress, have the realtor go over line item per line item and have the realtor explain to you in layman’s terms what each paragragh means prior to signing it. Basics on what is written on the real estate purchase contract is the date, purchase price, down payment, contingencies such as appraisal contingencies and home inspection contingencies, sellers concessions if any, and mortgage contingencies, and 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. If you are 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 extremely stressful.
Mortgage Approval Process
After you entered into a real estate purchase contract, the mortgage approval process begins. The mortgage approval process does not have to be stressful if your mortgage loan originator collects all data upfront and the mortgage loan application is processed correctly the right way. A good loan processor will ask you for every information and documents a mortgage loan underwriter will condition you for after the conditional approval. A conditional approval is a mortgage loan approval that is only valid if the conditions are provided to the mortgage loan underwriter. If the mortgage loan processor submits every possible information and does not miss any documents such as 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, and other pertinent documents. The more information and the more cooperation you give your mortgage loan officer initially, the less stressful the mortgage approval process will be.
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 extremely stressful. 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.