Homeowner Now

by Ben Anderson

  2. ANWERS: to 3 important questions. A great loan officer makes the Q&A simple. These are the 3 primary things you'll need to know:

  a. How much money do I have to put down?

  b. How much can I afford to pay monthly?

  c. What price range of homes does this lead me to?

  3. DOCUMENTATION: This is why you need a great loan officer; he or she must be able to let you know what they need in 1 simple list. A great loan officer knows how to make a mountain seem like a mole hill. You’ll send your trusted loan officer THE LIST. This list is documentation of assets and expenses that includes your tax returns, your W2’s, your pay stubs, your bank statements, all pages, front side and back side.

  The loan officer will need to closely audit every page of every document you send in. There could be 1 line on your tax return that could qualify vs. disqualify you – such as 2106 expenses. These are expenses that a W2’d employee writes off that their employer does not reimburse them for, such as a coach buying his team dinner.

  Let's say a grade school soccer coach spent

  $600 last year taking his kids out for celebratory pizza, and he lists this as a 2106 expense. Some underwriters may view that as a $600/yr loss against income. That seemingly (to you) insignificant expense

  could lower the loan amount you qualify for – or even disqualify you altogether. But a great loan officer will catch this line item and help you prepare the file for approval by obtaining letters of explanation. For example, this teacher is no longer a coach, so the expense will not continue. Or it was a one-off expenditure that will not occur in the following years. This letter, submitted by your loan officer, explains the true facts. But if a computer is processing this file, or is doing the work of a loan officer, that file could be denied because there is not an explanation behind the expense.

  If a buyer has any cash deposits, those will need to be explained, otherwise they can’t be used and the buyer might not qualify. If the buyer has gaps in employment, a smart loan officer will identify that and prompt the buyer to explain why. Maybe it was a family emergency. Maybe, temporarily, they fell on hard times. There is always a human story to be told.

  You’ll need a home insurance quote. If you don’t know where to start a great loan officer will refer you a great insurance agent.

  There is so much about THE LIST that makes creating THE LIST and satisfying THE LIST an art.

  This list can make or break your entire home buying process. Every borrower has a story, and they’ll need a great loan officer to tell the underwriter their story. The narrative can show the underwriter why the buyer is qualified. And this is no small order.

  Additionally, with modern technology a great loan officer will arrange for you to upload your documents securely, and it will take mere minutes.

  4. GET PREAPPROVED: An easy process that takes 5-15 minutes if you have a great loan officer. He or she runs your credit, and fully qualifies you based on the docs you sent. If they see any issues with income or credit, they will give you advice on how to improve your situation. And if everything looks good, they'll send you a letter stating you are "PREAPPROVED!" ... this is your golden ticket.

  5. REAL ESTATE AGENT: You need a great realtor to help you achieve your next step. You need a skilled negotiator, you’ll need a local expert, you’ll need a contractual stud, you’ll need someone who understands all aspects of the home inspection process. You may be buying your fist home, or selling your home and moving up, or keeping your current home and finding a renter while moving up. All phases

  of the home buying process, when it comes to the realm of the real estate agent, should not be taken on one’s own. The good news here is that if you are buying a home, the buying agent works for you, for FREE. That's right, many people try to circumvent the buyer's agent, who – you read it correctly – is literally at their service for FREE. The seller of the home you're buying pays the commissions of both their agent and the buyer's agent. You need a great buyer's agent, one who gets you, knows what's most important to you about the home you're buying, and will fight for you – even after you get your house keys, should something crop up. They will fight for the most favorable price and fight to negotiate all of the extra things you want. In the home buying contract almost anything is up for grabs: furniture, appliances, items that need to be fixed, etc.

  The question is how does one find the BEST agent? How does one truly find a consummate professional? How does one choose from a list of the best of the best? In most cases, the buyer uses someone they know who is a realtor, or someone their friends or family have used before. But does that ensure you have the best person for the job?

  Now that we’ve established finding the right agent is crucial, where you find them is the million dollar question, which I'll soon address.

  6. VISIT HOMES IN YOUR PRICE RANGE: That range is now set up front and you are prepared to wheel and deal. Having gone through the first 5 steps, you the buyer, have a huge edge; and here is why: When an unqualified buyer submits an offer to a seller, there is a component called the “loan contingency.” This is the buyer informing the seller, "I am interested in purchasing your home – but I don’t have a loan yet. I would like to close in 30 days – but I'll need the first 17 days to get my loan approved." This contingency makes sellers very nervous, because the buyer has not been approved yet. And if 17 days comes and goes and the buyer is not approved, the buyer can back out of the contract and risk nothing. He or she has no skin in the game; no deposit to protect you; nothing. If the seller is looking to buy another home, in most cases they can’t afford a 17 day waiting period. But a buyer who is able to submit an offer, along with an official letter showing they've been approved for a loan, allows the seller to feel much more confident that this potential buyer will perform, and the deal will close on

  a date they can rely on. Because this buyer, who is correctly qualified, will not need this 17 day wait clause. This makes your offer much stronger than other offers on the table. And it could make the difference in you getting into your dream home vs. getting passed over for a higher offer from a non- approved bidder. Because if the seller's agent is doing their job, they'll advise: "Take the secured money – even though it's a little less. The higher bid could easily fall through. Meantime you lose the guaranteed buyer who's moved on."

  Finding home values in a buyer's price range, starts by establishing what that range is after an expert loan officer has qualified you, then choosing a highly qualified local realtor who will fight to get the right price for you.

  7. MAKE AN OFFER: Your real estate agent will submit an offer on your behalf along with the preapproval doc your lender has given you. Once the offer is accepted, you go into escrow and through the closing process. On average this takes about 30 days, but your realtor can negotiate more or less to suit your need. And once again, this is where your preapproval letter gives you a distinct advantage.

  Congratulations are in order! You’re now a happy home owner! Not only did you survive the home buying process without getting ripped off, but by following my 7 True Steps to the letter, you came out ahead of the game!

  Once again, the Ben Anderson 7 True Steps to Home Ownership process can be simple and easy, IF you’re dealing with a great loan officer who knows and utilizes this process. But I cannot say it enough... you MUST! MUST! MUST! start with a great loan officer! Otherwise just about any other process will most likely become a nightmare.

  This common horror story is not only a buyer's experience; it can seriously affect sellers and agents, too. A seller is depending on the buyer to perform, because in most cases they need the money from the sale to buy their next home. I'll give you one example that I’ve seen play out far too often. One of my (seller) agents called me in a dead panic."We're one week from closing and the deal is blowing up!" she gushed.

  Her client had accepted a good offer and during escrow the buyer was unable to get final loan approval. I asked the agent to slow down and tell me what happen
ed, from the beginning.

  The agent had received a call from a buyer's agent saying their client loved the home so much that they ended up writing an offer, and entered into a contract.

  Everything seemed to check out, the buyer even had been preapproved! The bomb dropped 23 days into a 30-day escrow when the buyer's agent informed my agent that the loan was mysteriously declined. How could this happen? They were preapproved by a loan officer, right? Or were they?

  The reason this was such a distressing situation was, the owner my agent represented, was in a contract to buy another home. And the seller of that home was also in a contract to buy another home. I call this the Real Estate Domino Effect. Home #1 must sell, for home #2 to sell, and home #2 must sell for home #3 to sell. You see, if the first domino doesn’t close, everyone loses, 3 families don’t get to move, 6 agents don’t get commission, and lives could be turned upside down. People's money, families, and plans, are ruined!

  Now back to the problem and how this all started. Even though the loan officer sent over a preapproval letter, it turned out the buyer didn't pass approval by the lender (bank).

  How did this happen? As I've pointed out, the bar of entry to be a loan officer is very low. As a result, many loan

  officers don’t know how to property pre-approve a buyer, yet the whole process hangs on the preapproval being legitimate. My agent wasn't aware that the loan officer who issued the approval had slapped it together without having thoroughly reviewed the buyer's documents. Unfortunately, this happens all the time and I regularly get calls from my agents in a panic because the inept lender (or broker) told them that the buyer was approved; then later a disqualifying issue comes up.

  So, what was the upshot? I called the buyer to see if I could save the deal. I reviewed the buyer's documents and the first thing I noticed, he was self-employed and as such writes off a lot of expenses. The tax returns were very complex, and it was easy to see how an inexperienced loan officer could miscalculate the income. I thoroughly audited the file, then spoke to the buyer and asked him to provide me with 12 months of business bank statements. I resubmitted the docs to the lender and got the loan approved and closed using a bank statement loan that is specially for self-employed buyers. And they only had to extend the closing date three extra days. Every domino eventually fell into place, but the stress taught my agent a valuable lesson: Make sure you take a hard look at the loan officer who issues the preapproval as much as the preapproval itself.

  I don't like to tell on myself... but long before I knew what I know now – in fact, on my very first purchase loan, I made an egregious error. I ended up pre-approving a buyer who was using gift funds from her parents – a totally normal thing to do. But what I had overlooked was a little-known regulation that prohibits using gift funds when you are buying an investment home – but it's okay on a primary living home. And she was buying a home specifically as a rental property – not to live there herself. My lack of comprehensive knowledge back then of all the intricate codes cost the buyer that home. If the agent I was working with only knew that was my very first loan, he would have likely spared everyone a lot of disappointment by taking the time to find a more experienced loan officer to get the tricky deal done.

  Moral of the story: When you're buying a home, unexpected and unforeseeable issues come up all the time. But an experienced pro who’s been there – done that, will almost always find a solution to keep the deal on track.

  So, for posterity, I say it again: The 7 True Steps to Homeownership become a much shorter and easier path if you have a true expert loan officer guiding you every step of the way.

  CONCLUSION

  HOW WE CAN FIX THE PROCESS, TOGETHER

  So who should you trust? Some might say, "Well, I trust my bank, so the loan officer who is assigned to me doesn’t really matter." But that logic will get you in trouble almost every time. Because the loan officer is the one negotiating terms and processing the paperwork. That's akin to saying, "I like the franchise where I get my hair cut, so I don’t care that the person cutting my hair just got out of training, I'll let them practice on me." It’s the people who matter, not the institution. I have closed many loans that other lesser- experienced loan officers could never close, because a great officer knows everything about every loan program out there; and there are hundreds of them. If you need a serious operation, do you go to the hospital and ask for the rookie surgeon who is performing their first operation? Or do you seek the best practitioner they have on staff? Why not start your home search the same way?

  Home ownership is one of the most critical parts of life. It could be a right of passage, a family benchmark, or a dream come true. Whatever the motivation to buy, long-term home ownership is one of, if not the best investment one can make. Home ownership will always trend long-term because it's the safest path to wealth; and we all need a home. Many wannabe

  home owners never become home owners because they didn't know where to start, and they ended up following a broken process. For years we’ve been taught to first go find a home online, then contact a real estate agent, who'll refer you to a loan officer.

  Today's well-informed buyer understands that you need "money in your pocket" before you go to buy. And that letter of approval is good as gold. It puts you in a power position when you are looking at homes. It turns you into a very attractive prospect to sellers. So be sure you have your loan approval before you go house shopping. You do not walk into a mall to buy a pair of shoes without knowing you can afford to purchase them. Likewise, you should not walk into a house without knowing you can afford to purchase that home. Without your secured approval in hand before you see a home, you sacrifice lots of leverage in your agent's ability to negotiate the right price.

  As a top 20 loan officer in the USA, year over year, and one of only a handful who can say they have closed 3 billion and counting, I witness the problems firsthand because I speak to thousands of buyers every year. I am hacking into the banks' trade secret right now to let you know what the REAL problem is that these banks don’t want you to know. Banks need loan officers to go after business. Most loan officers are

  not equipped to handle your finances. Most loan officers truly cannot calculate assets and liabilities to arrive at a true picture of your net worth. Most loan officers struggle to answer the phone and reply to emails on time. Most loan officers fail to keep a schedule. And most loan officers shy away from the tough-to-close loans, or don’t get them closed on time.

  If you ask most real estate agents, the #1 compliant they hear about loan officers is their failure to communicate clearly with the buyer throughout the process. But I see through the broken process because I've been diligently working to fix it for the past 15 years. That's why I am recognized as the #1 loan officer coach in the US by my peers, who have also become great loan officers.

  Many fledgling loan officers will not like me calling it like it is, but it's time to be transparent. As I've pointed out, it's in my DNA to help those in need – and today's home buyer needs a great loan officer.

  Many of you future home buyers are likely wondering, How do I find that GREAT loan officer who will guide me through the quick and easy 7 True Steps to Home Ownership? You may also be thinking, After all, most of my friends and family have not pulled the trigger because they didn't know where to begin, or thought the process was out of their league. How can I do things differently?

  The answer to these questions manifests in those two tried and true words: DUE DILIGENCE. Search long and hard for these loan officers and do not settle. Stay the course until you have thoroughly researched and found an expert.

  Here’s a secret few buyers know: the Scotsman’s Guide puts out a report on the top 200+ loan officers in the USA every year. You can look up the report, put together a shortlist, then view them on social media; really peer into their lives, find out who they are, what are their interests; see if you connect with them. Read their reviews, then pick up the phone and call them, text t
hem, email them, or instant message them. Then take note on how quickly they respond – how Johnny-on-the-spot are they?

  How you can join me in fixing the process is to look up the loan officers FIRST, find a great one – then the next six True Steps become easy.

  MY GIFT TO YOU

  The #1 problem home buyers have is not knowing where to start. I want to resolve this dilemma for you, so I have created America’s #1 preapproval service. It puts the control into the hands of you, the consumer. If you can chose who you date, based on reviewing a profile up front, then why shouldn't you be able to do the same with your lender, broker, or loan officer? Right? Absolutely!

  That's why I conceived HomeownerNow.com. This site allows buyers to search for their lender/loan officer/broker, based on location, background, social media presence and content, bio, production, and positive reviews, and social likeness. Finally buyers, the choice is yours! Now you can choose from EXPERTS – and only EXPERTS.

  HomeownerNow will help you vet only the best loan officers, lenders and brokers to work for you. Never again will you be forced to submit your personal and confidential information into an uncaring search site, and wait for unqualified loan officers, lenders, or brokers to call you. Then subsequently your phone is ringing to death, your texts blow up, and your email is getting spammed. You deserve to have control – and now it is in your hands.