4 Frustrating Hurdles First-Time Homebuyers Can Expect To Confront
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Ideally, buying a home would be simple. You would invest time to tour several homes for sale, select a property that meets your budget and preferences, submit an offer, and close escrow. In reality, there are many potential obstacles that can waylay the transaction.
Working with an experienced real estate agent will help minimize the likelihood of problems getting in the way. But they can still occur. From credit score snafus to financing foibles, the experience can be frustrating for first-time homebuyers. This article will guide you through four common hurdles you may be forced to confront.
1 - Meeting Lenders' Credit Score Requirements
One of the results of the recent recession has been that mortgage lenders have increased their credit score requirements. Five years ago, a FICO score of 670 would have been sufficient for securing a conventional loan (a 620 would have been enough for an FHA loan). Today, lenders are being much more careful. They're extending mortgage loans, but require FICO scores above 740.
If you have pristine credit, you're unlikely to face this hurdle. In fact, lenders will welcome your business. If your credit history is less than stellar, however, you may have problems finding a loan.
2 - Receiving An Accurate Appraisal
Years ago, the appraiser was someone who was experienced and familiar with the neighborhood in which a home was being sold. He or she would be hired by the lender, and would look through records of recent sales of similar properties in the same vicinity. The appraiser would then apply a formula that took into account several key factors, such as the size of the lot, size of the home, and the layout. The result was an accurate valuation that helped guide negotiations between the selling and buying agents.
Things are different today. The establishment of the Home Valuation Code of Conduct in 2009 ended the practice of mortgage lenders picking their preferred appraisers. Instead, appraisers are now chosen randomly. Unfortunately, many lack experience and familiarity with the neighborhood to which they have been assigned. This makes getting accurate appraisals problematic.
3 - Last-Minute Problems With Financing
This is one of the most frustrating obstacles first-time homebuyers encounter. By the time they submit their offers, their loan applications have been approved by their lenders. Everything seems to be in order. Then, their situation changes. For example, their credit history is updated, and their score plummets; they lose their job; or an error is discovered on their loan application. These and many other circumstances can cause your loan to fall through, and thus derail your home purchase.
4 - Surprise Damage Or Defects Revealed By Inspections
Prior to the transfer of title, you'll need to have the home inspected. An professional inspector will check to make sure the house is structurally secure, and evaluate the landscaping, drainage, roof, and other exterior elements. The inspection should also include plumbing, the HVAC system, electrical wiring, and the garage and attic. Each of these items (and many others) can hide damage or defects. The inspection will reveal them.
When damage or defects are discovered, it's appropriate to ask the seller to repair them, or lower the property's selling price. This can develop into another set of negotiations. In some cases where first-time homebuyers neglect to include this item in their contracts, the homeowner can walk away from the transaction. Unfortunately, they can legally do so without returning the homebuyer's earnest money deposit.
Even when the process of buying a home goes smoothly, it can be frustrating. There are myriad details involved, including inspections, negotiations, escrow, paperwork that must be submitted by certain deadlines, and meeting lender requirements. Familiarize yourself with this process upfront. If problems develop, you'll be better able to address them.
Article Source: Articlelogy.com
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