Why Home Buyers Get Turned Down
I am always surprised at how many potential home buyers are unwilling, or reluctant to gather all of the paperwork required to get pre-approved to buy a home.
The natural tendency for many first time home buyers seems to be to gravitate to the path of least resistance, and the fastest answer.
If that answer happens to be anything other than an immediate and emphatic “Yes”, the search continues until they find someone willing to tell you what you want to hear, with as little information as possible to support that conclusion.
The truth is, borrowing hundreds of thousands of dollars is a BIG DEAL and should be taken very seriously.
If all you’re looking for the “easiest” path, you’ve probably already spoken to a mortgage call center. Hopefully you’re reading this before subjecting yourself to that.
Easier is not Better
It’s human nature that we do not like to get bad news, and we will go through crazy extremes to deny, or listen to warnings about the possibility that an outcome could be anything other than rainbows and bunny rabbits.
This is also the reason why some do not go to the dentist or doctor’s office as often as they should (guilty as charged).
Regardless of what we “want to hear”, the answer to the question “Do I Qualify” has already answered. The answer lies buried in your work history, your credit profile, your savings, your tax returns, and a number of other factors that can sometimes disguise the real answer to this question.
Are you only willing to listen to what you want to hear? Or are you encouraged when a lender has the ethical fortitude to tell you that they do not have enough information to give you an accurate answer at this point?
Preparation is Everything
There are absolutely cases where home buyers have educated themselves about the process, and have worked hard to be in a position where you qualify for the most money at the lowest possible cost.
If you are this buyer, you approach a lender with all of the documentation already current and collected so that they are able to provide you with an underwriting decision.
This exceptional preparation makes the home buying process easier for your lender to get you into the best possible loan that meets your specific goals, which also allows your real estate agent to make more aggressive offers on your behalf.
The goal here is to buy a home with as little headache and stress as absolutely possible. The more work you do before escrow opens, the less stress and opportunity for surprise during escrow.
No is Not Always the Final Answer
In most cases, we’re talking talking about fatal scenarios where you are flat out denied for a home loan and are never allowed to own a home for as long as you live…..it’s not that bad.
What we are really talking about here is simply going into the home buying process educated and empowered, and putting yourself in a position of control over the process.
It’s not that it’s difficult to qualify for a home loan, it really isn’t that hard. Expect to jump through some hoops, answer some questions, explain some issues, and do not make offers on a home until you are fully approved with a lender.
I apologize for having to be so blunt, but it’s a heck of a lot easier to hear this now, than to hear the words, “I’m sorry, you are not going to qualify to buy this home”.
The final answer might simply be that you qualify to buy a different home, maybe a little less expensive, maybe using a different loan program, but it doesn’t mean that you cannot be a homeowner.
Now, wouldn’t you like to take the time, and make the effort to get it right the first time?
Light at the End of the Tunnel
Seeing a light at the end of the tunnel is a horrible expression. I propose we stay out of the tunnel and simply conduct business out in the daylight like responsible consumers.
Buying a home is such an emotional process that expectations, frustrations, and sometimes even blood pressure can reach almost unbearable highs if things “suddenly change” while you are in escrow.
I’m telling here and now that it is extremely rare that a fully approved buyer will have issues serious enough to fall out of escrow. It’s the buyer that is working with a lender or real estate agent more concerned about commissions than clients, that needs to worry about “surprises”.
In most cases I see, it’s not that you do not qualify to buy a home, you may just not qualify to buy this home, the one that you already made an offer on, that got accepted, that you’re already thinking about paint colors for.
That’s a long and painful emotional drop if you find out that your lender or agent did not take the time to make sure you were properly approved before making an offer to buy.
In conclusion, there are no short cuts. Be prepared to painstakingly go through the detailed, and thorough process of gathering all of your documentation, ordering verifications, running your credit, explaining unusual items on your assets, income and credit.
Anything as amazing as owning your first home is worth taking your time and doing it right! Now that you know, you’re in control of your own home buying destiny. Do not give up that control to anyone!
Always remember….If it sounds to good to be true, it probably is. If you are educated and prepared, it will never sound too good to be true. You worked for it, you earned it, it’s just true.