Purchase 101 - Ten First Steps every home buyer should take.

When we are preparing to buy a house there is a plethora or things that need to be planned out and executed. 

OK, so you want to buy a house? Now what? Well the first question you should ask is, Can you afford a house? So here are 10 steps every home buyer should take. 

Step 1. Pull all your income documentation (2 Years Taxes Federal only, pay stubs, W-2's, 1099's, K-1, any 1120's or 1065's you may have) and plop it down in your home office, kitchen table or foot stool. Income for a mortgage loan is calculated by using gross income. Or your wages before taxes if you are a wage earners. If you are self employed, then we typically use tax returns to calculate your two year average earnings. We don't use Gross Income for this, but there are "add backs" to your income, or deductions we add back to your income calculation. That is why it is important to provide your mortgage professional with complete and accurate information at all times. Curious what an underwriter has to review? 

Step 2. At this point, you should be investigating who you will contact to start your application process with. You will then send all the items collected in Step 1. to that person by fax, email, overnight, or pigeon if you are so inclined. 

Step 3. Once your mortgage professional determines how much house you can afford you should begin your shopping. There are a million good sites both by Realtors and sites like www.Realtor.com and www.Zillow.com and search for houses in the price range you are looking for, in the neighborhoods and cities you'd like to live in. Your mortgage professional will give you and your Realtor (To be named later) a Pre-Approval, Pre-Qualification Letter or something similar to that. This letter will outline your approval amounts, terms, and your overall strength as a buyer. This letter will be shared with the Seller and Listing Agent when they consider your offer to purchase. There is never anything confidential on these letters. 

Step 4. Once you determine if there are homes in your price range, in the areas you want to be in, you should begin interviewing Realtors. Find someone knowledgeable about the home buying process and someone that really knows the home buying process. Like choosing a mortgage lender, choosing a Realtor, should always include a large consideration of experience. There is just no replacing real world experience. 

And let's not forget this is what may amount to the largest financial decision of your life. 

Step 5. OK, We've got a Realtor and a Lender. Now you are going to get even more professionals involved. From home inspectors, to title and escrow, to home warranty to hazard insurance. You are going to need A LOT of other people involved in this home buying process. This is where your lender and realtor can provide a bunch of help. If experienced, they will have referral partners for just about every product you need and their prices are going to be competitive. If you are trusting them with finding and financing your home. You will most likely be able to trust their referrals. But with everything - get on the internet and double check stuff. It can't hurt. Be educated about the things you know and Be educated on the things you don't. If there is ever ANYTHING that you don't understand... Call a time-out and make someone explain it to you. 

Step 6. You're Approved! So at this point, you are really only Pre-Approved. You've got a Realtor, You've got a Lender--- Well go find a house already!! 

Step 7. You've Found It!!  The house of your dreams. It's got everything.... Well you better believe that everyone else wants it then too! Time to get your offer in quick. Your Lender prepares a specific pre approval letter geared to the house you want and the offer price your Realtor will make. This is critical time. Do you offer high or lower than list?  Do you offer a higher down payment to look stronger? These are items your experienced Realtor will help guide you though. 

Step 8. The Offer. You did it! The offer is in. You went list, you feel good. Your Realtor is getting good feedback - and sure enough they accepted. You are in escrow. You've written your deposit check already. It better be from an account where the money was seasoned for a couple months. Now your lender will have  another list of items they will need from you. Remember Lending is paper intensive. The best way to deal with this amount of paper to BE ORGANIZED. Have a file. Have it organized. Gather and keep all documents together at all times. Take them to work with you. Remember a smart phone takes pictures. A great way to get pictures of drivers licenses and social security cards to your lender. 

Step 9. In Escrow = In Hell - Lean on your Realtor and Lender when you are in escrow. They will be a guiding beacon of light in a time that will feel very dark at times. There is always a lot of back and forth and few fees you will usually have to advance. Typically the escrow deposit, appraisal fee, home inspection fee, homeowners association certifications, then of course the remainder of your down payment and fees. Although you can usually covers all your closing costs with the price of the new mortgage - just ask a seasoned vet how to do that 

Step 10. Closing you are there. There is usually a lots of hustle around your closing date. There could be a rate lock set to expire, a credit report that will need to be run again. Always an updated pay stub and bank statement condition it seems....But if you stay on top of everything and respond to requests quickly, you should get your loan documents to the table in a timely manner. Make sure your drivers license or ID is updated and current for your notary and relax your hand for a lot of signatures. You'll feel like a rockstar by the time we are through. Once done your docs get sent to a bunch of different places (county recorder, lender funding department, title, etc.) and your loan is prepared to fund. Once funding occurs you are aren't the actual owned until "we record" a term basically noting the deed transferring title has been recorded with the county...At that point you are a homeowner. A good Realtor and Lender can help even after closing. You may have questions about payments, home owner repairs, moving, what have you. Chances are your professionals will have the answers to the questions you have. We've seen it all as experienced real estate and mortgage professionals.

And congratulations you now own a house! 

What we do. What we can do for you.

So I thought it wise to re-educate all my readers, past customers, and partners about all the products and services that California Property Resources offers today.

1. Residential Mortgage Financing - We offer EVERY mortgage product out there for a home loan. Owner Occupied, Investor, Vacation, Units, etc. All with amazing terms. I beat banks and direct lenders all day long. Moreover, I can offer non-traditional financing too! Subprime Lending is back and there are stated income alternatives for investors as well. We even have a "24 month bank statements as income program" program.

2. Commercial Lending - SBA 7a and 504 loan are amazing and offer 90-93% LTV financing for the purchase of primarily owner-user commercial buildings. SBA loan terms are very reasonable today and if you own a property, want to buy a property, or refinance a property, check in with me to see if we can improve your terms. We also offer Investor owned commercial property financing.

3. Asset Based Lending - We offer financing for Accounts Receivable. If your business is paid through invoices from another business, you may be able to sell those invoices and receive cash much faster. So if you in a cash flow pinch at the office, or need cash faster for a big expansion, this may be the prefect product for you. Quick easy and without all the bank hassle.

4. Contact Mortgage Processing - Simple Solutions is a division of our company that offers NMLS approved Contract Mortgage Processing to Mortgage Brokers and Bankers. This service allows Bankers and Brokers to avoid the hassle to interviewing, training, and managing full time employees. There is a significant cost benefit to the companies who use contract processing. And in today's rising interest rate environment, this may be just the trick to keep profit margins up.

5. Land Contracts - We are a licensed Real Estate Broker, but we don't offer traditional Real Estate Services. What we do offer is the creation, management and administration of Land Contracts or Contract for Deed transactions. If a buyer and seller can come to terms directly and avoid the Real Estate commission our service prepares contracts, deals points, and administers the payments through the life of contract.

Thanks for listening and please reach out if you or someone you know is in need of any of our products or services.

Rates are up, but they are still ridiculously low.

There is a saying that you can't catch a falling knife? Well I can catch a falling knife, but I think the point is that you can't time a low..in anything. low stock price, low car price, low home price, and low interest rates in general. And even if you could, how would you know that you got THE lowest rate? You wouldn't because there is always someone else who could shave a few bucks here and there. My point is this, the market is still very exciting and if you already refinanced to a rate under 4% you probably wouldn't need to refinance again. If you are buying rates are still amazing, and you shouldn't let the news telling you rates have spiked to hinder your decision.

Customers want to be lied to?

Back in my early days, one of my superiors shared this bit of advice about clients (business to business and business to customer. He was of the opinion that when all is said and done, that people want to be lied to. Not that they know they want to be lied to specifically, but that they don't know they want to be lied to.

I'll give you an example. Say a client calls me to shop a rate. The prospective client heard on the radio "fixed rates at 2.75%" and they call me and ask about a 30 year fixed rate which let's say at the time is at 3.5% and immediately, they are put on the defensive. Even if they don't tell me they've heard that rates are lower on the radio. The assumption is that the sales guy is selling me a higher rate. Now to be fair, that can happen. But I always quote lowest possible rates. And I am always very competitive.

Now back to the point. If the client tells me about the commercial he/she heard. I will of course, tell them that the commercial they heard was most likely offering a 10 or 15 year  fixed rate and the "fixed" portion of the commercial is the teaser. It's gets them to call the advertiser, or at least someone. Most of the time, the client gets that and can be convinced that what they heard was a commercial and I was being honest when quoting rates. However, there is a portion that doesn't believe me and will undoubtedly call the advertiser to check my story. Sometimes they call back and sometimes they don't.

That is the simplest explanation of the title of this blog article. But once we drill into real specifics it gets tougher to sway a customer away from a lie. A more specific instance would be a guideline variation.

A few weeks back, I received a call from a Realtor (my favorite we all need em' but few are worth dealing with). He noted that his client completed a short sale OVER two years ago and was looking at homes to buy and wanted to make an offer that weekend.

My first response, great let's go. Second response, Are you sure the short sale AND transfer of title of the previous property went through OVER two years ago. Of course, he said yes. Ok let's get the deal put together and I'll double check the transfer of the previous property.

By the end of the day I had established that the previous property was transferred just shy of two years prior. In fact, it was three weeks short. However, the guidelines state that credit can't be run until the two year window has elapsed. I of course, immediately called the Realtor and told him we'd need to wait another couple weeks....and of course he didn't like that answer.

So the Realtor calls another lender who tells him what he wants to hear..." Oh I can do that now" Send me the deal. One week later, he of course comes clean. But you know what? I didn't get the deal. The other lender who lied did?! What a slap in the face.

Here is a perfect example of a case where the client (Realtor) wanted to hear what he wanted to hear. Do I need to work with clients like this, no. But you'd think that being honest and forthright would win the deal every time. But people I am here to tell you that....Customers want to be lied to.

The worse scenario is when a client think you kept vital information from them when making a decision. Client closes a purchase loan with me and calls a few months later to talk about removing the mortgage insurance on the loan. Sure I say, values have risen, let's take a look. I start with ..."on the refinance... "Wait", he says. I need to do a refinance to remove the mortgage insurance. I say, yes on a FHA loan mortgage insurance stays on the loan for 5 years.

While the loan was in process we talk about every program available, every down payment option, and all mortgage insurance options. Now after everything is done forgetful memory makes me look like I was keeping valuable information from the buyer before closing. Do I expect a client to remember everything we spoke about, no. But don't assume that it is the sales persons fault or neglect when you can't get remember what conversation went down.

Was I better off saying, sure let's do it, and then stating the request was turned down, or do I simply state I am sorry you don't remember. Frankly, I think the telling them want they want to hear is better. But I went with option two and now can't a call back from the client.

Gotta' love it, but I think that the client does want to be lied to - they don't know it - but they do.

So if you want someone to tell you what you want to hear. Please do not call me.