The First Lady Of Finance®

From my March 28th, 2010 column in the Sacramento Bee…

If you are buying your first home, chances are you are dealing with more than what first time homebuyers have dealt with in the past. One reason is that today most of the homes on the market are either Short Sales or REO’s both of which require more time to get offers accepted.

Another reason is that prices have dropped so much on houses that the competition for entry level houses is fierce and those homes are also attracting investors which creates even more competition for the lower priced, starter homes.

Short Sales are properties where the property is worth less than is owed on the property. If the owners want to sell the property, they need to first have the potential sale approved by the bank that holds the mortgage. REO properties are properties that banks own because they have been foreclosed on by the bank.

Buyers become frustrated having to make offers on so many properties and then by the long waits. So what can you do to help lessen the stress? You can be a “proactive buyer” while you are waiting.

One thing that may lessen the confusion that occurs with so many offers is to set up a notebook with copies of the offers being made. It is not uncommon for buyers to have offers out on several properties at one time so you may want to have dividers with tabs that have the various addresses.

In this notebook, you can not only keep copies of the offer but also flyers any on the property. You may also want to have pages where you can make notes on the property listing things like pros and cons on each property.

Do you have children? You can also use the waiting period to research the schools that surround each property in a little more depth. Some buyers are incredibly good at checking neighborhood details that includes more than schools. It can also include nearby shopping, freeway access, and convenience to your work.

These things are all important but often buyers don’t have the time to check these things out because an offer on a property is accepted so soon. Once you have an accepted offer of course, most buyers want to have a home inspection done to check the overall condition of the property. Gathering other information though is just a bonus of having extra time.

Another proactive thing buyers can do is to make sure that their financial information is up to date with the lender. More often than not these days there can be months that pass before the buyers actually have their property.

Lenders always need to have things like bank statements and paystubs be no older than 30 days when the file is underwritten. Buyers often forget about this and in getting ready to move, pack up their financial papers. Your financial information is very important to the lender so be sure that you keep that information nearby. For instance, you might have done your income taxes since you first applied. Your lender may need these depending on the loan type you are doing.

Another proactive thing buyers can do is to start getting ready to move. Waiting to get an accepted offer may be a good time to start sorting things. Why move things that you will wind up throwing out when you get to your new home. Moving is always a perfect time to sort through things but usually people don’t have that extra time that buyers have right now.

One thing not to do is to start buying things for a new home. This is so tempting when you see new furniture or things for a bathroom or kitchen possibly on a great sale. But buying new things can either add to your debt or deplete your cash supply. Lenders most likely will need to rerun your credit because the existing credit report is too old.

Keeping your lender in the loop about anything that affects or may affect your financial picture is a very proactive thing. Sometimes that may just be something like whether you should be renewing your car lease. The dealer may be offering a great new lower rate that sounds appealing to anyone but by starting anew you may be increasing the debt. If there is anything financial, make that call to your lender and ask the question before rather than later.

Waiting for offers to be accepted and losing out on properties is frustrating to most buyers. Making use of that time can be a benefit if you use it wisely.

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