Handling the Unexpected

Category: Mortgage
Published:November 7th, 2018


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What's included:

  • Steps in the Home Buying Process

When purchasing a home, there are certain steps to expect such as becoming prequalified or getting an appraisal. However, sometimes the biggest steps can be unexpected. In this webinar, you will learn about different challenging situations that can come up, and how to handle them.

Transcript:

Handling the Unexpected

Welcome everyone! My name is Sherry Olsen, and I would like to start off reminding you that I am with Define Mortgage Solutions, which is the new subsidiary of Desert Financial Credit Union. We are the same lending team in the same branch locations with the same phone numbers. I am part of this Real Estate Lending team and have been in loan origination and management for more than 25 years, and I sincerely hope to be a resource for you today. For those new to these webinars, we have created a series of webinars covering the mortgage process with the goal in mind to offer better service to our members and to bring you additional value. This is the third webinar in the series. Last month we discussed various loan programs. Sorry for the possible repeat of basic information, but if you would like to review or share any of the webinars with others, the recorded webinars are available on the main Desert Financial website at DesertFinancial.com/Webinars. Today’s webinar will be posted for review within 48 hours after we finish. Today we are covering “Handling the Unexpected” which may sound potentially negative which is not at all my intention. There are occasions where a home does not appraise for the asking price, or an inspection of the home uncovers an issue beyond your comfort zone. Today I will point out a few examples to further educate you. If my comments create questions, you can post them at any time by using the chat box. I will also be referring to a document during the presentation. The document referenced will also be available for download later on the website.

Remember, as I recently mentioned, during this webinar I will be pointing out situations that may affect the closing of a loan, or your decision to proceed with the purchase. I would suggest perhaps taking notes that you can refer to later.

But let’s back up a bit and start with what the process to purchase a home should look like so we can discover where the possible challenges or surprises may appear.

Here is a review of the timeline for purchasing a home:

To start with, most curious buyers have a tendency to search for homes online before they ever speak to a loan officer regarding pre-qualification, or even a Realtor. Buyers are often curious and wondering, what is out there for me? They may have a specific need, whether it is a desired neighborhood, unique home features or a specific price point. We lenders do understand; although you may have the steps in an unusual order. However, since that early searching is so common, we are here is assist you; so stay tuned as we will cover the best practice for that home curiosity a little later with a unique offering of a mobile app called HomeScout. Write that down. Listen for HomeScout information later in the webinar.

It is strongly suggested that you consider pausing on the home shopping and hopefully follow this path instead:

The actual first step is obtaining a pre-qualification from a loan officer in a branch or with our electronic group of loan officers, with everything handled over the phone or email. All the details of your income, assets, residency, credit and eventual property are evaluated.

With that thorough pre-qualification in hand, (meaning all documentation have been provided and reviewed), you, the buyer, have the opportunity to make a choice and determine which seasoned, licensed Realtor should assist you with locating the best property that will meet your needs, financial goals and timing. It is in your absolute best interest to request a consultation with the Realtor of your choice to review the contract, in detail. In Arizona, it is a common expectation that when an offer to purchase is accepted you will actually close, which means all legal documents are signed and recorded, and you will own a home possibly 30 days later. That means you, as the buyer, will have to be extremely prepared and very proactive to meet a number of time sensitive issues regarding inspections, review of title documents as well as numerous additional tasks all referenced in the Arizona Purchase Contract. So again, choosing a Realtor that will spend time with you, before you start looking at homes so you know what to expect, is very important. This is where you, the buyer, pull out the notes you have taken today and ask questions about home inspections, appraisals, HOA’s and title polices. Discuss the mortgage jargon, expectations and procedures for purchasing a home, so you are comfortable, educated and prepared.

Here is a pause on my part to let you know that Define Mortgage Solutions has a Broker Program to assist with your Realtor choice should you need it, which I will review later.

The point is – we want you informed, and prepared as the pace can move very quickly and the tasks are important.

In a perfect situation, your offer to purchase a home is accepted, escrow opened with a Title Company of your choice, and this step will include the deposit of your earnest money.

Okay everyone, before we get too much further it is time to stop and acknowledge where the unexpected issues may occur at this early crossroads. Since every transaction is unique, and we probably cannot cover all of them, let’s consider these and remember they may very well not apply to your transaction. Are to ready to touch on the unexpected?

In a previous webinar, I reviewed that the pre-qualification process may uncover an unexpected credit issue or income that cannot be used based on guidelines. To avoid this, share everything upfront and provide all of the documentation the loan officer requests. Discuss any concerns or questions you have about the pre-qualification process, so you have attempted to address any surprises you can possibly think of that might arise once documentation or verifications are returned. Even if you are just unsure---talk it out. Make special note that certain Down Payment Assistance Programs require the home counseling be completed before you ever write a purchase contract.

Equally important is the fact that the Down Payment Assistance funds are not reserved for anyone until after you have an accepted offer, which could mean in rare cases, that funds may not be available for a particular program. You may have to wait for re-funding which would certainly create a problem, so review all the steps with a loan officer, and remember that on occasion the situation may be out of your and Define Mortgage Solutions’ control. Certainly an example of an unexpected situation.

Making a choice of a Realtor that is experienced in the area you are interested in, who will understand your timing needs and your availability to look at homes is very important. Having an upfront consultation with the Realtor about their role, reviewing the Arizona Purchase Contract as well as personal timing requirements is critical to your successful purchase with minimal stress once you obtain a yes from a seller regarding your offer. This is your biggest commitment, and you should be in control.

With that - here comes a few comments on our Arizona real estate market as of November 2018. If you have listened to any recent Arizona news commentary regarding the number of homes listed for sale, you may have picked up on the reported shortage of homes listed in some zip codes in the Valley. This point is being made so you have some understanding and can avoid any shock or disappointment. With that in mind, you will need to plan for how quickly you can look at a property that becomes available and meets your criteria. Unfortunately all I can suggest is to remain realistic. Your timing may be off and the home you are interested in has an accepted offer before you can even see the property. Or, you may write an offer and the seller chooses a different offer over yours. Sincerely, I appreciate how disheartening, and frustrating this may be, but it is common in some neighborhoods and price points in our current market. Although it may not happen to you, since the market is always changing, the reason for this webinar, similar to the previous webinars is to educate you. Define Mortgage Solutions is here to prepare you and present as many solutions as possible. As a suggestion, you may review your work and life schedule and make an effort to modify it, if possible, to view homes as soon as they become available. However, we also want you prepared for situations out of the control of you or even us, the lender, Define Mortgage Solutions. I realize that I am sharing challenging points, but Define Mortgage has your back. The possible situations I have mentioned may rattle your confidence and dampen your enthusiasm which is why we are diffusing the issue and focusing on possible options. Although Define Mortgage Solutions is a wholly owned subsidiary of Desert Financial, nothing has changed regarding our commitment to members.

At this point, we have already covered an example of an offer being rejected or a home that is already sold before your offer is considered.

What else might create a bump in the road in the loan process? Well remember earnest money becomes due with an accepted offer and must come from an asset that you already shared with your loan officer. Make sure to avoid “surprise funds to close” as everything is documented and must match. If anything has changed, speak up as early as possible. As we have discussed in a previous webinar, gift funds are acceptable in most situations, but those funds must be documented, a gift letter executed, and the funds trailed so, again, the pieces all come together. This is your reminder to not open or close accounts or move money around. Keep it the same!

Okay, let’s reset and return to the loan process:

Back to a positive situation with your accepted offer and the process moving along. You are even meeting your tasks as you agreed to per the purchase contract.

Per the contract you are determining who will provide your insurance on the property, (Home Owners Insurance, and perhaps Flood Insurance should the property call for it). Another suggestion is to confirm with your Realtor the property type, so you are prepared to review all the details and certifications required for condominiums or properties that have a Home Owners Association.

Soon after your purchase contract is accepted, your home inspection will be scheduled with your Realtor’s assistance (if you choose to obtain one), again referencing and paying attention to the close of escrow date, and those contract deadlines that you agreed to.

I am pausing here to briefly review home inspections. First, a home inspection is not required and is not an appraisal. Realtors indicate that most buyers do pay for a home inspection as they are seeking a thorough inspection of the home. When the report is received you and your Realtor will review it to determine if there are issues or repairs that need to be addressed with the seller. This is a time of negotiation regarding the repairs. You have again hit the possible unexpected territory. You and the seller may not come to an agreement, or you may be uncomfortable and want to cancel your purchase contract after reviewing all options with your Realtor.

If you have a short window to purchase and close on a home due to your lease ending or your personal goal, be very upfront with your Realtor and Loan Officer and be extremely available to look at homes, as soon as possible. You may have to reconsider what you want/need in a home. Again, these are pointers to help you reduce stress and recognize a possible disappointment or frustration.

During this same closing timeframe, once you provide your intent to proceed and funds are received, the appraisal is normally ordered.

This major pillar of the purchase transaction will take us to possible additional challenges, and options/solutions to consider.

Occasionally buyers ask to postpone the appraisal (because of the cost involved) until the home inspection process is completed since that also has a cost. Just consider that this slows down the loan process, and you agreed to a specific closing date. Focus on communication and discussions with your Realtor and loan officer. Define Mortgage follows all guidelines and as soon as the appraisal is received, a copy of the appraisal (before the underwriter’s final review) will be delivered to you. There are occasions where the appraiser may submit an appraisal that reflects a value that is lower than the sales price or may have a requirement that must be met before the close of escrow. Perhaps the appraiser requests a roof inspection which requires time to complete and an additional cost. Again, once you have received an appraisal, if it should reference any issues, after talking to your loan officer you will contact your Realtor to determine what your response will be.

Again, it is important that you have a basic understanding of the contract so that the various timeframes are not a surprise.

Are you still with me?

We have once again covered a great deal in this brief webinar, so let’s move to the closing.

Enough with the examples: At this point either the issues have been resolved or none even applied and your file has gone to underwriting for final review, so loan documents can follow as soon as possible. The underwriter may request an additional document or explanation so be prepared, as it is the underwriter’s role to confirm everything. When this step is completed, your Closing Disclosure is sent to you for review which requires your acknowledgment of receipt. We must notate your receipt, as Federal Guidelines require that you have three days to review the Closing Disclosure, and ask any outstanding questions. It is good to recognize that even the government wants to make sure everything is explained and transparent.

Next up is preparing your closing documents and sending them to the Title Company for your signatures. As your closing documents are prepared to be sent to the Title Company note that your credit is reviewed one more time, and your employment confirmed again so here is another reminder to keep everything the same – same employer and same credit profile.

Yes, at times buyers take a new job or buy the new furniture for the house, all of which requires a complete review and restart. If you are considering any changes, that should be shared upfront or as soon as possible.

Okay document get sent to Title, you are called by Title to schedule a signing appointment, and you are provided instructions for your funds for closing.

Only follow instructions direct from your Title representative. Protect your identity and verify before you wire any funds. Take no chances.

Are we looking good everyone?

Let’s wrap this webinar up with a number of positive comments.

Early in the webinar I mentioned a mobile app called HomeScout. Well if you are going to be curious about homes on the market let’s provide a private app from Desert Financial where your information will not be shared over and over again, and you will not receive numerous calls and emails. Everything regarding the listings of homes for sale is accurate, up to date and presented in real time. You can shop for homes just like a Realtor. The app is available at no charge by following the instructions you see on the screen. You simply download HomeScout from the App Store or Google Play Store and use the personal code Desert Financial VIP. Make sure you choose HOMESCOUT. If you have any questions or challenges with the app, let us know, and we will assist you. It is amazing what you can do with the HomeScout app. The code for the HomeScout app is on the screen but make note it is Desert Financial VIP.

Another frequent concern – as a buyer you may be uncomfortable choosing a Realtor, well we have another option in our Broker Program, with Realtors across the valley that were recommended by their Real Estate Broker. If you choose a Realtor on the list that the loan officer will provide to you, the Realtor will contribute $500 towards your closing costs. You can call and interview any number of the Realtors that are on the list and make your choice. Remember to pick a specific realtor from the list.

Finally, if you would like to get started, we have loan officers ready to take your call as this webinar ends since there is no cost or obligation for a pre-qualification. If you want to meet in a branch, tell the person taking your call, and they will transfer you. Check out the slide for contact info and remember we are here to answer your questions or explain programs. Even if you plan on purchasing next year, get started today, so you are in control. After all it is your home purchase.

By the way, if you have already taken the time to get prepared with documents ready etc., ask your loan officer about our Closing Guarantee which provides an additional value and confidence.

Okay everyone, we are officially approaching the wrap for this webinar. I hope you pick up the phone and call the number on your screen 602-433-HOME (602-433-4663). The home buying process is just that – a process, and we will prepare you and work with you every step of the way.

Looks like we are clear on questions which is great. The next webinar will be on Wednesday, Dec. 5th at 11 a.m., and, of course, I hope to have you join us then.

Thank you for attending and if you need to reach me, my contact information is currently on your screen.

This is Sherry Olsen with Define Mortgage Solutions signing off for today, and although a bit early in the season, I encourage you to enjoy the upcoming Thanksgiving holiday with friends and family!

Take care, everyone.