The home loan process can be daunting for seasoned homeowners, let alone first time home buyers. Paperwork, paperwork and more paperwork, followed by credit checks and more required documentation.
Troy Stavros, Broker and Partner with the 865 Real Estate team at Gables & Gates, REALTORS says, “Today’s strict lending guidelines can call for even more steps in the process, but with a plan it can be done with less stress.” The following steps should be taken prior to searching Knoxville real estate, in order to make getting loan approval a smooth, successful endeavor:
STEP 1. Start pulling together documentation prior to starting a Knoxville real estate search. Mortgage experts are recommending starting 6 months to a year prior to beginning a home search. Why so early? There could be credit issues to resolve, debt that needs to be paid off, or down payment money to be saved to allow for approval. Those things take time. Waiting too long can hit a buyer twice as hard, by coupling the denial of a loan with the loss of a dream home.
STEP 2. Get pre-approved prior to starting a home search. This is a major step that anxious buyers like to skip over that can cause heartbreak. A pre-approval (not a pre-qualification!), uses complete documentation and gives a buyer the green light from the lender that should a home be found, financing is approved and available. By not completing this step prior to a home search, many buyers are looking at homes in price ranges they cannot afford. This leads to frustration and heartbreak, when a buyer realizes the perfect home the search has found is out of reach.
STEP 3. Most new buyers understand that saving up for a down payment is necessary but many are not aware of closing costs. The down payment and closing costs can be two significant numbers, and buyers need to plan on saving up for both prior to beginning a home search. Closing costs can vary, but a general rule of thumb is to plan to pay around 3-4% of the purchase price.