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What Not To Do After You Apply For A Home Loan

You’ve applied for a mortgage, and you’ve been accepted. Your loan is about to go to underwriting, and you’re going to be getting your very own home in no longer than a month. Or, you will as long as you don’t do anything mentioned on this list below. We’ve seen so many people mess up their home loans and not be able to close on a house because of the items listed below. Here is our list of what not to do after you apply for a home loan. Don’t let any of them happen to you!

1) Apply For A Credit Card

Do not apply for any sort of credit cards while you are in the home buying process. From an American Express to a store card from Kohls, Lowes, or Home Depot. Do not apply for any sort of credit cards. This can throw your credit score out of whack, and it can make your entire home loan fall through. To you, it may just be a little credit card, but to the mortgage company/bank, it is another item that you have to pay.

2) Buy A New Car

Your car breaks down two weeks before you’re supposed to close on your home. It’s completely paid for, but you want a new one. So, you go down to the local Toyota dealership and buy yourself a brand new Toyota Sequoia. No big deal right? You’ve got plenty of money to make the new car payments and still pay your mortgage. Unfortunately, the bank doesn’t care. Even though you may think you’ll have enough money, the bank probably won’t think that. To the bank, it’s another debt that may take priority over your house payment in the future and cause you to stop making your house payment. This will almost always kill a mortgage. DON’T BUY A NEW CAR UNTIL AFTER CLOSING!

3) Quit Your Job

Even if you have another job lined up, stay in your current job until after you close on your house. You have to have an income in order to pay for a house. No money equals no house, so if you quit your job, you’re out of luck. You won’t be able to buy a house. Mortgage companies also like to see two years of continued employment – something that quitting your job will obviously hinder.

*Note: We are not mortgage lenders or bank officials of any kind. Please consult a lender or mortgage company before doing anything in the home buying process even if it isn’t mentioned on this list.

4) Don’t Start Using Your Credit Cards Like Crazy

Continue to use your credit cards like you normally would, but do not go overboard. Don’t buy a bunch of stuff at the monthly sale at Belk or buy a bunch of ‘new home’ items on Amazon. Any big purchases are something else you’ll have to pay back, and the bank doesn’t want you to have any more debt with anyone else before your loan closes. Control yourself and keep your spending as normal until your loan closes.

5) Do Not Start Buying Big Ticket Items

Even if you’re not putting purchases on a card, the lender will want to know exactly where that cash you took went and possible even why you took it out of your bank account. Lenders and underwriters only think about whether or not you will foreclose on the property, and if you buy a big ticket item while you’re waiting for your loan to go through, they question what you will do if times are tight and you need to make your house payment. Will you get pressured by the salesman and buy a new couch instead of making your house payment? They need reassurance not.

6) You Are Guilty Until Proven Innocent

What do I mean by that you ask? Lenders will assume you are guilty. That the reason you are doing whatever you are doing is for a bad reason that goes against you purchasing a home. All they think about is how likely you are to stop making the payments on your loan causing them to have to foreclose on your home. They assume that everyone is extremely likely to be foreclosed at first, and you then have to prove that you are not likely to get foreclosed on through the loan process. If you assume this is how it will be going into the loan process, you won’t have any issues.

Contact us if you are looking to purchase a home anywhere in East Tennessee. You can also call Patrick or me anytime! Nic: (423) 748-0999  Patrick: (423) 312-4543 

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How To Become A Real Estate Mogul Starting With Your First Home

Buying your first home can be a big achievement for many young people. It gives them their first big investment that they hope will increase in value and make them more money overtime. The truth is, however, many young people don’t realize that their primary residence isn’t actually an asset, and as they do normal maintenance, renovations, and upkeep, it will end up costing them much more than they’ll ever make when they eventually resell it.

Luckily, there are a few different ways to turn your first home/residence into a true, income producing asset while still living there and calling it yours. This is how to become a mogul starting with your first home!

Option 1: Buy A Multifamily Unit

The overall best way to become a real estate mogul with your first home is to buy a multifamily complex. This could be a duplex, triplex, or quadruplex, and it will allow your first home to instant start producing an income and making money.

The great thing about this is you can get an FHA loan on a multifamily complex up to four units — a quadruplex. Thus, you’ll only need a maximum or 7.5% down. That means you could get 3 additional income streams from your first home for just 7.5% of the purchase price of the complex. You then live in one of the units and pay all of the income from the property towards the mortgage. By doing this, you’ll pay it off in no time.

After that, you pull out the equity in the complex and purchase a few more complexes with 20% down conventional loans. You then put all of those units income into paying off those mortgages. Once you do this a few times, you’ll have thousands and thousands of dollars in income every month.

Option 2: Rent Out The Spare Bedroom

Thanks to AirBNB, Tripping.com, HomeAway, and more, renting out an extra bedroom has never been easier. If you live in a suburb of a large city, in a large city, or in a tourist city, this can be a great way to generate enough income to not only pay your house payment but pay it down quicker than you would have previously.

Once you’ve paid down your house enough, you can pull the equity from it using a home equity credit line, and then move into vacation rentals, flipping houses, or general long-term rental properties. The choices are endless.

Another advantage to renting out the spare bedrooms is the fact that you’ll be able to meet a lot of different people who are traveling and wanting to experience a new place. Chances are you’ll make some friends along the way, and you’ll be the owner of your very own home.

Check out these 4 Tips Every Home (or multifamily complex) Buyer Should Know!

Option 3: Buy A Fixer-Upper

This option is not for everyone. There are very few people who can buy a fixer-upper as their first home and make a good profit on the purchase. It’s also hard to live in this home, but if you work with a Realtor® and have your expectations set right, this can be a great way to make some liquid cash and start building your real estate empire.

Something that is worth mention here is you will most likely have to buy a fixer upper on an 80/20 conventional loan which means you’ll need a 20% down payment. You also need to have enough liquid cash to actually complete the repairs. Basically, you need a lot of money to make this work, but the return could be huge.

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3 Home Improvement Projects That Will Add Value To Your Home

Everyone wants to fix up their home, but many people don’t realize or even think about how much money those renovations will add to the value of their home. Luckily, we’ve made a list of the top three home improvement projects that will add value to your home.

1) Update Your Kitchen & Bathrooms

You may have heard some say “kitchens and bathrooms sell homes,” and there is a lot of truth to that. When someone walks into a home, there are really three things they primarily look at – the kitchen, the bathrooms, and how much space there is. Since you can’t easily make all of the rooms in your home bigger, the kitchen and bathroom are the two main areas you can remodel and get a lot of value. The good thing about this is you can do it slowly over time, and spread out the costs of the remodel. For example, one year you could replace the cabinets in your kitchen and all the toilets in your bathrooms. Next year, move on to new counter tops in the kitchen and new tile in the bathrooms. This process can go on and on, but it ensures that you have the funds to get the job done while spreading out renovations over time.

2) Increase The Curb Appeal

The first impression your home will have to anyone is how it looks from the street. It says everything to many potential buyers, so be sure to keep your landscaping on point, plant flowers, trees, and keep your lawn manicured. It’s also important to keep paint from chipping, siding pressure washed, and wood stained and tidy. These small, little things don’t take much work if you do them once a year, but they can take tremendous amounts of time if you let them add up. Keeping up with these simple exterior items will go a long way towards home value.

Thinking about selling? Check out these 6 things you must do before selling your home!

3) Finish That Basement!

Adding square footage to your home is the easiest and best way to increase value. If possible, add heat and air to your basement, put down some carpet, and paint the walls. These simple things will go a long way and could increase the value of your home 20 to 30%! In addition to that, you get new space to enjoy while you’re living in the home. It really is a win-win, and finishing a basement can be a lot more cost effective than many people believe. Remember how I said it’s hard to make your house bigger? Finishing a basement literally does that and increased square footage means more money for you when you sell the home.

Other Quick Things To Add Value

Here is another quick list of things that will help you get more out of your home when you sell it that don’t necessarily require an entire paragraph to explain.

  • Replacing carpet with hardwood.
  • Going from vinyl to tile in the bathroom.
  • Painting all of the rooms neutral colors.
  • Turning an extra coat closet into a half bath.
  • Adding a covered patio area in the backyard.
  • Installing new, insulating windows.
  • Painting the front door.
  • Simply not letting things sit. Fix issues as soon as they arise.

If you take and do two of these each summer, your home will hold and likely grow in value tremendously.

Need some help with home improvement? Check out HouseImprovements on YouTube!

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Home Buyer’s Guide – Steps to Purchasing a Home

The process of buying a home can be a stressful one filled with lots of emotions, which is why we think one of our most important tasks is helping our clients get through the process of buying a home as easy as possible.

To help simplify the process at first, we’ve created a guide to purchasing a new home.

Step 1: Talk to A Lender

Your lender should be your first stop when you’re looking into buying a home. One of the first questions your real estate agent will ask you is if you are pre-qualified. The best thing you can do for yourself is get pre-qualified before you start looking in order to avoid looking out of your price range.

When you talk to a lender, you’ll also need to determine what loan program you will be using (Conventional, FHA, USDA, etc.), as this can drastically change the process of purchasing your new home.

You’ll also need to make sure that you provide your lender with the documentation they request so that they can verify your debt to income ratio.

Step 2: Finding a Home

Step 1 and 2 are typically switched by most buyers; however, your agent will not be able to provide you the service you require if they are looking in a price range that doesn’t line up with your financing options. After you have nailed down your price range, it’s time to start looking for a new home.

Research your desired location in order to find all of the information you can about the area. If you’re new to the area, visit the local City Center or Chamber of Commerce. They will be able to provide you statistics for the area that your agent may not be able to provide immediately.

Be up front with your agent, and ask as many questions as possible in every house you tour. We’re all here to assist with anything our clients need, and the best thing you can do is gather as much information as possible.

Finding the right home should be the most fun step for you as the buyer, so be sure to make the experience enjoyable.

Step 3: Negotiations

Once you’ve found that house that ticks as many of your boxes as possible, it’s time to make an offer. Determine the best price to offer with your agent, and be sure that you are offering around fair market value.

Negotiations often go sour after about 2 or 3 counter offers, so be sure to come in strong enough to be able to work with the seller while also protecting your investment.

Once your contract is accepted, it is extremely important not to open any new lines of credit (credit cards, car loans, etc.). Do not quit or change your job at any time before closing on the deal. These two can shut a deal down almost instantly.

Step 4: Homeowner’s Insurance

After a deal has been negotiated, contact an insurance representative at a reputable company to set up the necessary steps to insure your new home.

Typically, buyers will combine auto & home insurance at one company in order to save money on their insurance rates. Talk to your agent about the best policy options for you.

Step 5: Home Inspection

The home inspection process is a tricky one, and many deals fall through in the inspection. Be ready to negotiate, but do not expect the seller to fix everything you request.

Most likely, if the seller has never experienced an issue with it, they won’t fix it. For example, if the heat pump is 16 years old but never had a problem, the seller is not likely to replace the entire HVAC system.

Be sure that anything the seller agreed to fix is finished before the final inspection/walkthrough.

Step 6: Time to Close

If you’ve made it this far, you should be good to go! It’s just about time to start moving into your new house. All that’s left to do is pay the seller and close the deal! You’re good to pack up and start enjoying your new home!

Previous Article: 4 Stress Reducing Tips Every Home Buyer Should Know

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Is It Time For You To A Buy Home – Should You Buy A House or Keep Renting

Owning a home is something many young people dream about, but figuring out if it is time for you to buy a home versus renting from someone else can be extremely challenging. This article sets out to answer that question – should you buy a house or keep renting?

What location do you want to be in?

When deciding whether to buy a home or continuing to rent, it is important to consider how long you are going to be in your current area. If you’re going to stay less than two years, renting is usually the better option. However, if you plan on staying in the place you’re moving for 2 or more years, buying is most likely the better option. It will allow you to make the changes you want and truly make the home yours. In addition to this, it is very likely that you will be able to make money when you sell your home assuming you were smart with the loan you got.

Overall, when it comes to should you buy a house or keep renting, location is one of the most important factors to consider. Specifically, how long you’ll be living in the area you’re considering. The longer you plan to stay, the smarter it is to buy!

Are you financially ready to buy?

The biggest reason most people keep renting, from what we’ve seen as real estate agents, is because they don’t think they can financially afford a house. They plan on staying in the area for a long time, but they think you need 20% down in order to purchase a home. This, however, is actually far from the truth.

USDA is now offering 100% no money down financing in certain areas, and FHA allows you to get loans with less than 10% down, sometimes as low as 3.5% down, all across the United States. Additionally, a house payment is typically cheaper than renting an apartment, so if you can afford $650 per month in rent, you could buy a $130,000 home for $25 LESS per month.

I would suggest talking to a local lender in your area. They will be able to give you the best advice when it comes to getting a home loan. Call a real estate agent and simply tell them, “I’m interested in buying a home, but I need to talk to a lender. Who would you recommend?” Any good agent will be happy to get you two to three recommendations of all-star lenders in your area.

*Just a quick side note. Online lenders like Quicken are usually horrible to deal with. Stay local as these are people you can meet face-to-face and hold accountable. 

Are you emotionally ready to purchase a home?

What do we mean by ’emotionally ready’? Well, the answer is simple. Buying a home is a taxing process, and even if you use our 4 Stress Reducing Tips Every Home Buyer Should Know, you’ll still most likely be an emotion wreck by the time the home buying process is done.

Additionally, you need to be emotionally ready to keep up with owning a home. Mowing the lawn, cleaning the gutters, pressure washing the sidewalks, these are all things you never have to do as a tenant that will become part of daily life as a homeowner. Are you ready to give up your Saturdays for this? If so, it’s time to buy a home!

Can you fix a toilet?

This may seem a little odd to include, but there are a lot of little things that can and will go wrong when you own a home. From the toilet leaking to changing the furnace filter, these are little things that you need to know how to fix before jumping in and buying a home. Luckily, there are tons of videos on YouTube telling and showing you how to do all of these different home improvement projects, so it’s not as big of a deal if you don’t know how to do them when you first buy your home. You, however, need to be ready, willing, and able to learn them as time goes on and problems come up. There is no reason to call a handyman to change your air filter. He’ll most likely laugh at you and then ask for $150. Learn to do it yourself, and save the money.

Check out HouseImprovements on YouTube for great home improvement how-to videos.

Overall, the little things that go wrong in a home are easy to fix as long as you’re willing to learn from YouTube/Google how to get the job done. If you aren’t willing to learn, stay in the rental and call the landlord for repairs. If you are, buy a home you can call yours! You’ll build equity, and over time, you’ll make much more money and be more financially successful because of it.

In Conclusion: Should You Buy A House or Keep Renting?

Deciding whether or not you should buy a house or keep renting is one of the hardest decisions you will ever make. Truthfully, however, it just comes down to some simple and basic decisions. Are you going to be staying in your home for more than 2-3 years? Have you talked to a lender, and can you get financing? And, lastly, are you okay with having to keep up with the maintenance of owning a home? If you answer yes to all of these questions, you should buy! It just makes sense. You’ll make more money over time, and if you keep renting, you’re just throwing money away.

Contact us if you are looking to purchase a home anywhere in East Tennessee. You can also call Patrick or me anytime! Patrick: (423) 312-4543 Nic: (423) 748-0999