18. From Tenant to Homeowner: Overcoming Financial and Credit Challenges

Dreaming of owning a home but feel it's out of reach? In this episode I am here to guide you from just thinking about it to actually getting your house keys. We'll bust myths, give you practical steps, and strategies to deal with high interest rates, tight budgets, and bad credit.

Covering everything - understanding loan officers, using down payment help, keeping your job, avoiding new debt, and improving credit scores. If you get a loan denial, don't worry, we'll show you how to bounce back.

Also stressing the importance of having a good real estate agent and loan officer by your side. They're key allies. We talk about the need for compromise, smart money management, and the lasting benefits of owning a home. Don't be scared of buying a house. 

Stay connected with me for even more valuable content and stay in the loop with the latest trends in the world of real estate. Your journey to becoming a real estate pro starts here.

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Transcript

Basic Steps to Homeownership

Speaker 1 0:00

The average home in Houston is $300,000 . It sounds like a lot of money and so you've already talking yourself out of it . Or you think , oh man , I got student loans , or my credit isn't that good , and you're talking yourself out of it . So you're already anticipating a denial before you get started . But let's just say you do go through with it and you do put in a loan application and you get denied . It kind of confirms your own fate . Right , you condemned yourself already . And then you end up getting a loan denial and it's like see , I told you , I told you I wasn't gonna be able to do it and so now don't walk out discouraged . You walk out with the information of why was I denied and what action plan do I need to put in place for the next six months or a year , whatever the case may be , so that when I reenter this building to apply again , I don't get denied this time . So rule number one scratch out the discouragement , scratch out the excuses and go for it .

Speaker 1 0:57

Don't quit your job . Most people I had this happen where they waited , they made an offer on the house we were under contract trying to go to closing . The loan officers do last minute employment verifications all the way up to closing . So don't think just because they verified it in the beginning , when they first pulled your application , that they're not gonna verify it again . Like you can't go quitting your job Up until the very end . You have to prove that you have the ability to pay this loan back . And so don't quit your job , don't go buy a car , take on extra debt . Anything that you do , it alerts the lender and they will find out about it before closing , and typically the closing process 30 to 45 days is the typical time that it takes . Once you find your home , your agent negotiates the contract and you actually have a valid contract to buy a home . The seller has agreed , you've agreed , you've signed the contract . That's when the real games begin , and that's about a 30 to 45 day process , and that's when the real games begin .

Speaker 1 2:02

Hey , hey guys . This is Natasha LaQuinn , the queen bee of real estate , and you're listening to the Throne and got a special treat for you guys . Today we're gonna be talking about home ownership , and I know what you're thinking . I don't wanna hear that interest rates are at 8% . Who's buying houses in this market ? We're all just trying to survive . You can say that Well , I have a bunch of resources and information that will still help you . There's no excuse . But more so , it's gonna be very basic information , just preparation , the proper steps . I know we've talked about investors in the past and basic steps to become a real estate investor , but we have left out the home buyers . So we're just gonna talk very basic , just when the first thought enters your mind and the light bulb goes off of I think I might want to buy a house for me and my kids . Just a little thought . What happens next after that thought ? So we're not gonna get too deep , but just give you some insight as to how to put one foot in front of the other and the steps that you should take , cause even though interest rates are 8% right now , six months from now they could be down back , down to 5.75 .

Preparing for Home Ownership and Overcoming

Speaker 1 3:20

So in home ownership , especially first-time homeowners , preparation is the most important part . So it's like , hey , just cause you're getting started today , are you preparing ? Today Doesn't mean you have to buy tomorrow . You might get your credit pool today and realize that , oh , I have some work to do and you don't even excuse me , you don't even get your loan approval until six months from now anyway , and then , six months from now , the interest rate drop and you realize that , hey , you are ready and I've had all this time to prepare . So don't get caught up in things right now . In the real estate market , this is one of those industries that shift and they change all the time . What was happening yesterday could not be what's going on next week , so don't let that get caught up . Get you caught up . Keep your mind on the overall goal and work on the steps to get to that goal . And the reason why I say that too is because let's fast forward . Six months from now , let's say you do have to do preparation and six months from now , interest rates are still at 8% . That's okay . Why ? Because , again , like we've talked about before in other episodes , there are down payment assistance programs that will give you grant money and you use that grant money to buy down the interest rate . Also , we are teamed up with a lot of different new home builders that offer new construction homes , and what they do is they have incentives for new home buyers where they offer you money to help you buy down your interest rate as well . We just closed a brand new home last week with one of our builder partners and the interest rate was a 5.75% . So everybody else was getting an 8% and because of the extra money that the builder threw in to the client , we were able to buy down the interest rate . So interest rate buy downs are a thing and they're a legit thing , so don't worry about that . Listen , we got you , so check it .

Speaker 1 5:08

You wake up and you said you know what ? I'm sick of this apartment . The people upstairs sound like they're like I don't know having a stump show . Their kids are doing cartwheels upstairs and you're just tired of the noise . Or this is one I've heard lately In an apartment . You know you shared the walls and stuff and if the people that live next to you are not clean , they have their little critters , aka Roach Festival Buddies come in to visit you and your unit and that's disgusting , right and ? But because you're connected to the walls that are above or on the side of you , there's nothing you can do about it . So maybe that's your reason , maybe it's just the overall sense of wanting to own something , having your money not be thrown out the window , and you're actually accomplishing something . So , whatever the reason is , you wake up one day and you're like I have this little spark in my heart to buy a home , but I don't know where to start .

Speaker 1 6:09

And what happens with first time home buyers is you discourage yourself . You get discouraged before you even walk in the door because you're already assuming that nobody's gonna give me a loan . Cause when you think about it , you know , let's say , the average home in Houston is $300,000 . You're thinking like , where am I gonna get $300,000 ? Nobody's gonna approve me for that type of loan , cause it sounds like a lot of money . And so you've already talking yourself out of it . Or you think , oh man , I got student loans , or my credit isn't that good . And you're talking yourself out of it . So you're already anticipating a denial before you get started . But let's just say you do go through with it and you do put in a loan application and you get denied . It kind of confirms your own fate , right , you condemned yourself already .

Speaker 1 6:56

And then you end up getting a loan denial . And it's like see , I told you , I told you I wasn't gonna be able to do it . And so now you walked in discouraged , you walked out still discouraged , and then you put that dream in your pocket for the next 12 years and you never decided to do it Because , see , I told you so I told you I wouldn't be able to do it . So for those of you that do put in a loan application and you get denied , don't walk out discouraged . You walk out with the information of why was I denied and what action plan do I need to put in place for the next you know , six months or a year , whatever the case may be so that when I reenter this building to apply again , I don't get denied this time . So rule number one scratch out the discouragement , scratch out the excuses and go for it . Okay , so the first step is actually the loan application , which that's the scary part , because it's like I don't . Nobody wants to be told no , nobody likes rejection . So that's always the tough part .

Speaker 1 7:56

But before the loan application , what you could do even if you're concerned or you want to have an idea of what they might say a good starting point is monitoring your own credit scores just to get an idea Most of our down payment assistance programs and the ability to get you into the property as a first-time home buyer . They require a 620 . So and on the episode before , damon and I kind of talked about this already , but what you can do is don't use credit karma . I know a lot of you guys use credit karma to monitor your credit scores , but what happens is it's calculated differently than the other credit models out there , and the credit model , the credit scoring model that mortgage loan officers use when approving you for a home loan , is the fight go Scoring model . Right , I know you've heard me say this before , but if I see , oh , fight go scoring model .

Speaker 1 8:54

And so what happens is , if you're using credit karma , I Believe credit karma uses the vantage scoring model and so the way that your scores will show up on credit karma are Different than what the actual loan officer may see . So , for an example , let's say you're looking on credit karma and credit karma says congratulations , like , your approval odds are great , you're at a 660 . And then you go to the loan officer for a mortgage and they're like no the hell , they're not . You , sir , are on life support in the credit department and your credit score is a five , you know 32 or something crazy . And you're like well , I looked on my phone and credit karma said one thing and that's because the scores are calculated differently .

Speaker 1 9:40

So if you are going to attempt to monitor your own scores . Make sure you're maybe using an app like my fight go calm . I use that one for my own and there's a few more out there . You can monitor it how however you choose , but just make sure you're looking at the fight go model . That way , if you're monitoring your fight go scores on your own and you see that your scores are a 540 . You know , are you really really below that 620 mark ? That's an indicator that maybe my first step shouldn't be the loan officer right , because I know they're gonna tell me no , because I'm looking at my scores . So maybe my first step is a credit repair person and we'll get into that in a minute , because there's a lot of , I guess , horror stories about that if you get hooked up with the wrong credit person . But you would know that , okay , I'm not gonna go and get my credit pool . First , I need to work on getting my score up a little bit and then , once you're monitoring that score and it creeps up into the Sixes , then maybe you go to the loan application . At that point , however , what the loan application process does . So let's let's say that you decide to start with the loan application first period

Loan Officer Role Understanding

Speaker 1 10:54

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Speaker 1 10:54

Like you don't monitor your scores at all . You don't want to monitor them , you just want the loan officer to tell you what's up . That's absolutely okay too , and the reason why is because when you go to the loan officer , even if you're not ready to buy , the loan officer is able to tell you why or why not . So if they pull your score , they're looking at I mean , they're poor your credit , they're looking at the score and they're looking at your income . They're looking at how much you bring in Versus how much is going out . So they might say , alright , I see that your score is a 617 .

Speaker 1 11:36

However , it's not because you have bad credit . It's because you don't have enough credit right , there's not enough positive things reporting on a monthly basis To help out , way you know , maybe , the bad things that are on there . So you need to go and open a new trade line . Or maybe you have a credit card and you've maxed it out through the roof . So , hey , your credit isn't bad . We just need you to go pay this loan balance down a little bit . And once you pay that loan balance down , our credit simulator it's on balance down our credit simulator is showing us that once you pay it down , your scores will go up to the points that we need .

Speaker 1 12:15

So , just because your scores are not Approval worthy , I guess I would say it's not because you have bad credit . It may just be . It's a combination of things . Maybe the there's not enough or the the usage on it is off . So that's what you have to remember too . It's not . It's never is . Having bad credit is never the only reason . It's a combination of maybe just not using it in the right way .

Speaker 1 12:42

So go into a loan officer . They are the first step because they can tell you how to use it properly . Maybe your credit is not the problem and they say , hey , your credit's fine , but you actually have too many credit cards . You need to close some out because it's eating away at your income . So we can get you approved , but we're not able to approve you for very much because it looks like all your income is eaten up in credit card debt . So hey , before we approve you , go out . You know . Pay off this account , close that one , close this one and Come back . Or maybe to get the house you need . You need some extra income . Go get a part-time job for the next 12 months , like or do you have a co-signer ? You know you need an extra income to get the type of home that you're trying to qualify for . So the loan officer is the one-stop shop .

Speaker 1 13:34

The loan officer is very important because of what some people do . You wake up on a Saturday morning and you go and see open house signs in the neighborhood . Are you like , hey , baby , let's go drive around and look at for sale signs in the yard ? Then you pull up in front of a house and then you fall in love and it's like , oh , let me call this number , we gotta have it . And you get yourself all worked up , only to find out later that you're not approved . So you don't want to get yourself worked up right . When I go to the mall , if I pull up at the Galleria , I want to be able to go shop and go to the cash register and buy what I want . I don't want a window shop , and so that's similar to going to a loan officer before buying a house . You're not just driving around the neighborhood aimlessly or blindly choosing homes , hoping that you qualify , and going window shopping . No , you're going to the loan officer securing the , the direct deposit right , make it the employer has deposited the check and basically and giving you the go-ahead to say , based on your credit score , based on your income , we are able to pre-approve you for this loan amount . Go look at houses at this price range . So you don't go driving around neighborhoods that you've fallen in love with only to find out you shouldn't be over in that neighborhood . You need to cross the street and go over here , because that is where your budget falls within . So it stops you also from getting your hopes up and driving your kids around and getting caught up in the wrong neighborhoods as well . Um , so , once you've identified that , you are well ahead of the game .

Speaker 1 15:10

Now let's talk about that process , because some people think that , oh , I've got my approval , now I have a three hundred and twenty five thousand dollar approval , let me get with my realtor and Start looking at houses . Oh , you don't want to do that either . You want to . You want to make sure that the approval amount also meets your monthly budget , and what I mean by that is you may get approved for $325,000 . However , the mortgage that comes along with that type of payment may not be the mortgage that you want .

Mortgage Approval and Budgeting for House

Speaker 1 15:50

Okay , so , for an example , I'm not a mortgage office , a loan officer , so don't quote me on this . But let's just say , on $325,000 , your payment is $3200 . Well , you may have a desired price range of $2,800 a month or $2,500 a month . So if your desired price range is $2,500 a month , you should really be looking at houses that are $260,000 . That's a big difference , right ? Because just because your loan officer approved you for $325,000 doesn't mean you want to go that high . So it's very important to have that conversation with the loan officer because they're going to give you an approval amount based on your income and based on how much they're willing to give you . But that doesn't mean that's what you want to accept . So it's very important to have the conversation to say , hey , before you even get started , or once you run my credit and it looks like I'm credit worthy and you verify my income , I just want to let you know my max payment that my family is comfortable with paying is $2,600 a month . Just FYI . That way , when they issue you your approval letter , they don't issue you your approval letter for the max that they can go up to at $325,000 . They're going to issue you the approval letter down at $270,000 or $275,000 to make sure that it keeps you within your monthly budget as well . So that's the thing Just because they offer you $325,000 , you don't have to take $325,000 .

Speaker 1 17:18

So some people think that , well , wait a minute , if they approve me for $325,000 , but I find the house for $300,000 , does that mean I get to pocket the extra $25,000 ? No , no , it does not . It just doesn't get used at all . So , yeah , they're telling you you can go up to $325,000 . If you happen to find a house at $300,000 , fine , we'll give you the loan for $300,000 , but that extra $25,000 is not waiting in the wind for you to go cash a check or anything . So no , so I just wanted to throw that out there . Your approval amount , your max approval amount by the lender , does not have to be the amount that you go with , because the monthly payment that comes with that may not be what is , within your monthly budget , very important , and don't let them talk you into otherwise either , cause they , you know .

Speaker 1 18:05

Now , one thing you will find is it always sounds good in the beginning too , to say , um , well , I'm not paying no more than 2,500 . And then you get with your realtor and they start showing you homes that may fit within what you have claimed to be your max budget and you start seeing the uh inventory or the results of what's out there , and it's like I'm not liking this , I'm not liking these results at all . And so that's when you and your realtor will get back together to say , well , you know , you've seen what's out there on the market , I've showed you everything . So it's 2,500 . Absolutely your max and a good agent . It's not that they're asking you that because they want to sell you a higher house . They're just making sure they're pushing you to say , hey , you've seen that 2,500 isn't getting you what you're looking for .

Speaker 1 19:00

Let's , maybe can you afford 2,600 ? You willing to go up to 2,650 ? You know that's an extra $150 . And a lot of us we spent $150 a month just eating that Chick-fil-A , you know . So it's like you may have that extra 150 laying around more than you think . So if creeping up just a little bit on my monthly budget for my house opens up more options for me , maybe I'm willing to make the kids eat noodles at home for one day out of the week versus going to Chick-fil-A , I don't know . Um , so you think about that too and you may start to see the market and say , yeah , 2,500 isn't getting me what I thought . Maybe I do need to creep up to 2,700 and kind of slowly go up and see , but everybody usually starts at that minimum . You know they start very low and quickly see that they might have to come up a little bit . So be prepared for that , um .

Speaker 1 19:51

But once you are pre-approved for your loan and it's time to go house shopping , that's everybody's favorite . That's the part that you see on Instagram when the realtors are giving the tours and you see in the granted countertops and all the cute stuff happening . However , you know there's a lot that goes behind the scenes before you get to the house shopping part . But obviously that's the glorified part of real estate , but it is the fun part . Um , that is the part that your realtor comes in handy for . And your realtor let's put this out there .

Speaker 1 20:24

A lot of people probably think of realtors as like used car salespeople or something . And no disrespect to use car salesmen Not at all but that's just this . You know shatiness , or they just out to get me , or they just trying to sell me something and earn a commission , or they just trying to talk me into something . That you shouldn't get that vibe from your real estate agent . Um , the right agent for you um as a first time home buyer . They're going to be more of a resource center . They're going to be your educational um guide , if you will , helping you through the process , helping you to understand what's going on , coordinating you to the next professional Right . So if you you have a realtor and you realize you need credit assistance , your realtor usually has the connection to a credit professional , a legit credit professional that can help you if you are on your home by your journey and you need homeowners insurance , your real estate agent oh , no problem , here's a network of insurance providers you can try . So they should be your resource center . They should be the person that's educating you , holding your hand .

Importance of Realtor and Compromising

Speaker 1 21:30

Maybe you're getting discouraged because you guys haven't been , haven't been able to find anything good that meets your needs or that you like , and you're ready to give up your search . Your , your realtor is the one that said no , no , no , I'm telling you , the right one for you is out there . It's all about timing is going to pop up before you know it . What's meant for you is for you , and it'll be there . They're there to hold your hand and make sure you continue with your overall goal and you don't get discouraged throughout the process , because the process can be overwhelming . So they're there as that cheerleader slash , you know , counselor , on the sideline helping you navigate this thing .

Speaker 1 22:06

So , um , your loan officer and your real estate agent there are your hey , that's your starting lineup . They are the most important professionals that are going to be on your team throughout this process , because you're need , you're going to need to rely on them and trust them a lot , because they do this every day , you don't . So , when there's something you get nervous about , or it sounds shady , or you don't understand it , or you've Googled it or looked on YouTube , right , cause we all do that and then we try to tell the professional what it is , and it's like I understand what you read on Google , but I'm telling you what I know . I do this every day . Please trust me . So it has to be someone that you really feel has integrity , that you can trust their word , that what they're telling you is is true , cause you're going to have to rely on that a lot .

Speaker 1 22:57

You don't , you don't do this , you know . It's just like you wouldn't . If you need open heart surgery , you wouldn't go and operate on yourself in the bathroom or let me get . Let me get and make myself a little incision here . No , you wouldn't operate on yourself . You go to a professional and you have a heart surgeon . If you got into major trouble and you need it I don't know you had a court case chances are you're going to get an attorney . You're not going to go representing yourself in court , and so it's the same thing . And I don't know why people feel the need to say I don't need a real estate agent , I'm going to do this on my own . No , they're there to help you . They are there to represent you and make sure it gets done properly . So having the right one with the right loan officer is going to be key .

Speaker 1 23:38

Now , when you hook up with this realtor and you guys start the search process , the most important part that you want to remember is you are not there to look at houses to keep up with the Joneses . You are looking at houses that fit your family's needs and your wants . You don't have to justify or , you know val , get validation from anybody else about what your choices are . I've seen so many times where this because , let me back up , we at my office , my agents , we don't show you or send you any properties that we wouldn't live in ourselves and we've been doing this for quite some time we pretty much know off the top of our head if this is a good property or not . If it's a good property , if it's a good deal , if it's price right , and so we pretty much know if this is a good house .

Speaker 1 24:36

And we've seen so many people pass up good properties because they're concerned about the fact that , well , this one doesn't have a game room , and my cousin they have a game room , they got a pool table and it's like , okay , well , do you really want a pool table ? Do you really want a game room or need a game room ? Or do you want one because your cousin has one ? Or do you want one because your brother told you that you needed one ? You know . So , really , it's going to be important to think about your usable space and your own family environment . Does it work for you now ? If you absolutely do need that game room and that's fine , then you know we'll filter through that . But don't lose out on a good property because you have these standards set in your mind . That's based on other people's standards and not your own .

Speaker 1 25:24

And just know , as a first time home buyer , there are going to be times that you have to compromise . Everything is not going to be exactly like you like it , and what I mean by that is you may want a large kitchen oh my God , this kitchen is beautiful , but the master closet is a slightly smaller than you want it . Or , oh my God , like this master bedroom . This master closet is amazing , but the backyard is a little , you know , a little smaller than you want it . There is going to be something during your home search . Unless you , you know , build a custom home , there's going to be something in your home search that's not perfect . So don't let a good property that's price right , that's good for you and the location that you want and all that Don't miss out on a good property because you're not willing to compromise on something . So think about that , you know . Get your pen and paper together and really figure out what your deal breakers are . And if it's a deal breaker , fine , let your real estate agent know that it's a deal breaker . But be mindful that there are some . There are some compromising that has to take place . So when you're writing that list and you're looking at your deal breakers , you know you're writing the things that you're willing to pass up on or you will negotiate on , because you might say , well , hmm , if it has a game room and an extra maybe an office space , because I work from home , then I'm willing to . I'm willing to give up the fact that it doesn't have an island kitchen . Okay , we can do that Because sometimes when you're a real estate agent , they're looking for the inventory that's out there .

Speaker 1 27:02

They're going to send you some stuff and they're going to send you what's available and you may have told your agent I want an island kitchen . But the inventory and the results that they're sending you , they send you five properties and none of them have an island kitchen . So you're thinking I don't want this , I don't want this agent . This agent isn't listening to me , didn't I tell her I want an island kitchen and she comes sending me these properties and none of them have an island kitchen . It's not because you're a real estate agent is not listening to you . It is because when we use the systems that we use to check out all of the inventory and we're narrowing down your search and we are filtering your search based on your location and your price range , that might not be available . So it's like crap .

Speaker 1 27:53

Do I call and tell you that there are absolutely no homes available . Or do I send you these five properties that actually are available , that are really good properties , that are in your location , in your price range . They just are lacking the fact that an island kitchen is missing . Like no , I'm going to send you these five anyway , and so you have to be mindful of that . Like , don't beat your real estate agent up too bad . You know they're doing their job , they're trying the best that they can , but they can't make inventory appear . That's not there , and so then sometimes you have to get creative . So let's say , they send you five properties and those properties are perfect , but the island kitchen is still an issue . They have those . I forgot what they call , what they're called I think there's an actual name for them or something but like the mobile islands that have wheels on them I think they're on Amazon and stuff , if you're , if you want an island kitchen , that bad they have , you know , the ones that you can actually buy and roll and move to the center of the kitchen . If there's space there for that , you can create an island , a portable one , and you can Google that later and tell me what the actual term that is because I'm sure it's a name for it . But you can get the island . So you start to kind of find creative ways to overcome what this particular property has or doesn't have . So give your agent some grace on that . So let's say you go out , you find the perfect property . Oh wait , I missed the piece .

Speaker 1 29:22

When you go property hunting with your agent , you want to make sure that all of the decisions make , the decision makers are there and so , for example , if you're married , your spouse needs to be there with you . So don't schedule an appointment to look at a property knowing your husband has to work tomorrow at 12 . And you go , you see it , you fall in love with it and it's like oh man , I love this , my husband would love it too . Can you bring us back here tomorrow to see it when he gets off work ? We're not doing that . You need to make sure when you schedule that appointment , you and hubby are together . If it's brother and sister and you're buying property together , you go and schedule those initial appointments together , because typically , if it's a good property and it's priced well , you're not the only one looking at it . So by the time you see it and you fall in love with it and you go and try to wait until brother gets off work tomorrow at six o'clock and you still have to go and look at it and da , da , da , da and okay , we want it . It's gone . Now you know it's not there anymore , or now somebody else has an offering on it , and so now y'all are competing against each other and you're trying to outbid and have this war going on .

Speaker 1 30:32

You don't want to do that . You want to get all the decision makers together . You also , however , don't want to bring too many people and too many extra people that are not decision makers . You don't need all the outside noise . You don't need , you know , aunt Mary telling you why you need a different cooktop in the kitchen versus that cooktop , or why , I don't know , I wouldn't buy this because I like elevated siblings , and these feelings , oh , they make me feel claustrophobic . You know , nobody's asking you , mary , nobody's asking you , and so you love it . And then Aunt Mary is straggling , you know , straggling along , being a bus kill with her opinions about what your money is going to be paying for every month . So limit it . Don't go telling everybody what's going on either . You know , make your moves in silence if necessary , and have the decision makers along with you . Now , you know if some of your down payment help or something is coming from mom or dad or whatever and they want to come along , fine , but yeah , leave all the extra noise , the noise out of there . So , anyway , so you find the home that you like .

Speaker 1 31:39

Now here's the part that's important negotiations , because a lot of people seem to have a con . There's a misconception that oh , I have a real estate agent , you better be negotiating for me , girl . If this house is 350,000 , you better negotiate your butt off , and I want it for 315,000 . That's not how that works . That's not how that works . You know when we talk about negotiations , you know , and real estate agent , there's a lot of things that go into negotiations and it's not just purchase price . We're negotiating things like are they going to pay an additional home warranty and extended home warranty for the next year or not ? Are they willing to offer closing cost help to you or not ? Are they allowing you an extra 10 days to get inspections done so that if something comes back on the property that you don't like , you can back out of it and get your deposit back ? So there's a lot of things that are wrapped up in the negotiation bubble that most buyers are just fixated on price , price , price . And it all doesn't go into pricing .

Speaker 1 32:50

And speaking of pricing , when we talk about negotiations on a real estate property , purchase price negotiations are not always as important as getting closing cost assistance . And let me tell you why . If we're dealing with a property let's say we're dealing with a property and it's a you know it's a property at $300,000 property and you tell your agent agent , I need you to negotiate for me and I expect $10,000 off the price of this house . I don't want to pay 300 . I want to pay 290 . So that's a $10,000 price difference . So for you , you feel like you won , you feel like you've done something . But when you take that $10,000 off the price of the house , it's over the period of a 30 year loan . So it only changes your payment by a couple of dollars . So it sounds like you did something great . Oh , 300,000 . My agent got me this house for 290 .

Understanding the Home Buying Process

Speaker 1 33:48

Big deal , because it's divided over the course of 30 years and it only changes , changes your payment by a couple of dollars , versus your agent keeps the price at 300 and says , okay , we're going to . They won't reduce the price they're going to keep the price at 300,000 , but they're willing to give you $10,000 in closing cost assistance . That's cash money . Okay , closing cost assistance goes towards helping you with the money you have to actually bring to closing , whether it's your clothe , your loan fees , your down payment fees , your upfront insurance all of the fees that have to come out of your pocket as a buyer . When you get closing cost assistance from a seller , it helps go towards those fees .

Speaker 1 34:29

So guess what ? If you get closing cost help , you've reduced the amount of money you have to come to closing with by $10,000 . So essentially , you've saved $10,000 out of pocket versus $10,000 over the course of 30 years . That was rolled into the loan anyway . So would you rather save a couple of dollars over the course of the loan or would you rather not have to come to closing with $10,000. ? And if it were me , especially as a first time home buyer I'm on a budget , maybe I'm a single parent , I don't know what the situation is I would rather if the only available item or the only available monetary item up for grabs was $10,000 and I had to choose how to use it . I'm not fighting my agent about reducing the price , I'm going to ask for a closing cost assistance , okay , so let's put that out there , because don't get caught up in that whole wave of negotiating price Now .

Speaker 1 35:25

Also , you want to keep in mind that because some people , people , some people are like , well , no , I want to , you know , be very unreasonable and I want to negotiate this price as low as possible , you have to think about it . The sellers you're going to be a seller one day . If you're buying a home , you're going to then be on the seller side and you're not just going to slash prices on your home when you buy property . You're buying it as an investment . You're buying it so that you can cash out on the equity that you developed over time . So just giving it to a stranger because they want to low ball you on a house , it's not going to do anything . So you keep that in mind .

Speaker 1 36:01

But also , sometimes , as a seller , they can't afford to reduce the price by $40,000 . The money might not just be there to do it . Think about it . Let's say you know they have a mortgage . Most of them have a mortgage on the property because they took a loan out , just like you . You're going to do so when they're selling the property , they have the sales price . Then they have to deduct the amount that they owe to pay off the mortgage so that it clears the lien to transfer the house to you . So there's a mortgage payoff . They have to pay the real estate commissions because as a buyer you don't pay the commissions , the seller does . Then , as the title transfer fee , most sellers have to pay the title transfer fee . So the sellers have closing costs and expenses as well . So by the time you're looking at the purchase price , mine is all of these expenses .

Speaker 1 36:45

Sometimes the seller can afford to go down any lower because if not they will even lower the price . They won't even break even . They they'll them . As a seller would have to come to closing with money . And what seller is going to sell their home and have to come to closing with money ? That doesn't make sense . So when you're looking at negotiations and how come they're on , they're not budging . The money isn't there to do it . You know they're still having to protect their asset and gain on their investment as well . So keep that in mind .

Speaker 1 37:13

Um , but ultimately the . So let's backtrack here . You got your loan approval going , you found your realtor , you found the house . You're willing to compromise so that you don't limit your options and then you're open um to negotiations . You're making sure that the important parts of the contract are being negotiated .

Speaker 1 37:31

Ask questions no question is a dumb question If you don't know . That is again what your professionals there to do , cause we hate this . We get this all the time . I'm sorry to bother you and I don't mean to bug you , but I have a question You're not bugging . You're not bugging us at all . That is our job , that is your real estate professional's job is to answer those questions and you want to feel comfortable . You want to be content and competent with the transaction that that you're getting ready to make Um from there .

Speaker 1 38:00

Along the process , don't quit your job . Most people I had this happen where they waited , they , they , they made an offer on the house . We were under contract trying to go to closing . The loan officers do last minute employment verifications all the way up to closing . So don't think just because they verified it in the beginning , when they first pulled your application , that they're not going to verify it again . Like you can't go quitting your job up until the very end . You have to prove that you have the ability to pay this loan back . So don't go quitting your job , um . And so don't quit your job . Don't go buy a car , take on extra debt . Anything that you do , it alerts the lender and they will find out about it before closing .

Speaker 1 38:44

And typically , the closing process 30 to 45 days is the typical time that it takes . Once you find your home , your , your , your agent negotiates the contract and you actually have a valid contract to buy a home . The seller has agreed , you've agreed , you've signed the contract . That's when the real , the real games begin , and that's about a 30 to 45 day process . So that 30 to 45 days you gotta be real good . Don't go transferring money here and there . Don't go making large deposits . Maybe you have some cash you've been saving under your mattress . Don't go dumping $10,000 in cash into the account . They're going to ask you about it and there better be a paper trail for it . So there's this 30 to 45 day timeframe . That is the closing process .

Speaker 1 39:30

And what happens during that time ? The , the loan officer . They're doing all their last minute verifications right . They're ordering updated paystubs . They may see something on your credit and say hey , we see that you were late on your car note last year . We just need a letter of explanation because the underwriter wants to know what happened last June when you were late on your payment . That's all you got to do Make a letter of explanation for them to put it in the file , right ? Um , maybe it's . Maybe the excuse was hey , I had my , I had my , I had my , I had my , I had my account on auto pay . I lost my debit card , changed debit cards and I forgot to transfer the information , and so when the payment was due , it didn't come out like I thought it did , and that payment is showing up late on my credit .

Speaker 1 40:13

That's fine , but that is what is happening once you find the home , because , remember , when you first go to the loan officer , they are issuing you a pre-approval letter . A pre-approval that means based on your credit , based on your income and your debt and all of the preliminary information on you as a person . We are able to give you a pre-approval in this amount Now , in order to make a final loan approval and get you an actual approval . That comes when you find the home itself . Now , that's when you know they're able to find , finalize the loan , and so they'll start ordering updated checkstubs , because you got to think about it .

Speaker 1 40:53

If this is a 30 day process , 45 day process , the checkstubs you turned in at the original loan application are probably outdated . So they're going to ask for that . They might see , like I said , letter of explanation . Or maybe you're getting your down payment money from a 401K account . They want to show the state , want you to turn in the statements to show where that money is coming from . So that's what they're doing . They're gathering those , the information on you , but they're also gathering information on the house now . So what are the taxes going to be on this house ? Let's order your homeowner's insurance on the house and make sure that it's not too expensive . Let's order the title information and start working on getting the title transferred over and clear .

Speaker 1 41:36

So there's different things that are happening and connecting all the dots that you can't . They can't issue you a final loan approval without an actual address , and so that's why , once you find the home , there's another 30 to 45 days as they're ordering stuff . There's a survey on the home that shows where the property line ends and stops . They're ordering an appraisal . So if you're trying to get a loan from the bank for 300,000 , they want to protect you and they want to protect themselves , right ? So they're not going to give you a $300,000 loan on a property if it's not valued at 300,000 . So they're going to order an appraisal on the property to make sure , hey , our client is trying to buy this house at 300,000 , they're trying to get a loan for 300,000 , or you know however much the loan is , for we want to make sure that the house is worth the amount that the seller is asking for . So it's to protect you . And so all of these items are items on this checklist for the loan closing file . And until all those checkbox are marked off , you can't make it to the final table . And so that's what's happening during that 30 to 45 day period . Nevertheless , you'll finally end up and you'll get there , and that's where all the magic happens .

Speaker 1 42:52

But that and , like I said , that's the fun part , but that's also the part that you're not too much involved in . There's a lot of back and forth and asking you for different documents . That's normal . Just be prepared for that , you know . So you have to build up your mental stamina and say , okay , I'm going into this full speed , I'm ready , I got my gear on , I got , I'm ready for war . I know they're going to be asking me for different things back and forth .

Speaker 1 43:15

You got to get it to them in a timely manner because when you sign that contract with your seller you're on a timeframe and sometimes if you don't close on time and it's your fault because you're not turning in documents , maybe the loan officer asks you for an updated checkstub so they can complete the file and you turn it in two and a half weeks later . You've delayed the file two and a half weeks Now . It doesn't close on time , so the seller does not have to give you an extension . And if they do give you an extension , they can charge you money or an extra deposit to extend and you don't want to have to deal with that . So just make sure you're doing those type of things on time and you're prepared for the questions that are going to be asked . So going back loan preparation preparation is key . Monitor your own scores , know what they are . Using a FICO scoring model , you want to look at your FICO scores . If you're noticing that you're creeping up on the six twenties and above , I would say that it's safe to reach out to your loan officer to get a loan application started and allow them to tell you what's happening with your income versus your credit profile , to issue you that pre approval for your loan .

Speaker 1 44:23

Start interviewing real estate agents . Maybe you know one , maybe you don't know one , but just because you know one , just because you have a classmate that's a real estate agent , that doesn't give them a pass to automatically get used . You know they still have to be professional and you have to know that they're competent and they know what they're doing . You don't want somebody that they they sell hair on the side , tomorrow they doing taxes , tonight they going , I don't know , do hair . They have a full time job as a I don't know a CPA and then they have they babysit on the weekends and they have , and there's nothing wrong with being a hustler and having things going on . But what I'm saying is you want somebody that actually does this Like I do this for real . For real , because when you need negotiations or you need information about special programs , you don't need somebody to say I don't really know or let me check into it because they have five or six other jobs . You want somebody that knows what they're doing . So make sure it's a competent person just because you know them . It doesn't have to be that way . You know you don't have to use them just because you know them and , just like I said , be prepared for

Preparing for a Mortgage Loan Approval

Speaker 1 45:34

compromise .

Speaker 1 45:34

But I think the most important part is not to get discouraged before you get started . Already set up in your mind that preparation is going to be key . Already have set up in your mind that , hey , I might apply for this home loan today and I might get denied today . But if I get denied , I will not walk away discouraged . My questions will be why was I denied and what do I need to do for an approval in the future and get to work . That is what you need to do . So if again you find out that it's you need to open up credit , you don't have enough . You need to pay down some credit . Fine , ask that question .

Speaker 1 46:17

Do not allow yourself to get a mortgage loan denial and not find out the reason why . Because the reason why is the key to you getting your house keys . It's the key to getting the key . I like that . So yeah the more . The reason for your mortgage loan denial is the key to getting the key . If you don't know the reason that you're denied , how can you go and prepare ? How can you go and work on it .

Speaker 1 46:42

And when I say work on it , that scares some people because like , oh God , there's this long list of things I have to do . Again , remember it might not be anything major . You might say , okay , you need to go work on this . That doesn't mean that it's a whole bunch of stuff . It could be one small thing . Um , no-transcript , I forgot this part .

Speaker 1 47:01

Child support in arrears , child support delinquency , student loan delinquency those are two really big areas that can stop you from getting your mortgage loan approval on your home . So skirt , stop the press . If you have student loan delinquencies or you're behind on child support , that is your key indicator that there's some stuff that needs to be worked on . It will not be overlooked . So that's some stuff that we're going to have to work on too . So just know that . But that doesn't mean that it can't get done . You just have that at the top of your head to know . All right , these are some areas and some items that I'm going to have to get resolved before moving forward in this journey . And that's all you have to think about it too .

Speaker 1 47:49

A lot of first time homebuyers . They obtain an FHA loan , which is a government-backed loan , and student loans are government-backed loans , so why would an FHA loan , why would that get approved when you are already delinquent on another type of loan that you haven't paid ? So having a payment plan or being on a forbearance or in deferment , that's totally different . If that's the case , that's fine , but I'm talking about those that are in serious delinquency , where they've actually classified your student loan to be in default . You got to call them and make arrangements to scratch yourself out of that default , whatever that looks like .

Speaker 1 48:26

I know , back years ago I just stopped paying my student loans . I just thought it was going to disappear . I guess this is a long time ago and I realized that my student loan was actually in default status and at the time , my student loan servicer they had a program where if I paid $50 a month for nine months straight , it would take it out of the default status and reinstate it into a normal status , basically . And so that's what I did . I paid $50 a month for nine months and then that's what happened . Now every servicer is different , but those are the kind of conversations that you're going to have , so just get accustomed to knowing . Okay , there's some phone calls and arrangements that I may need to make to line everything up , but I'm committed to this process because this is what I really want for myself .

Speaker 1 49:19

So there's a lot of other little pieces and nuggets in there too , but these are the basics to getting started , and you don't have to know everything . You're not expected to know everything or remember everything . That's what your loan officer is there for . That's what the realtor is there for . So remember , your loan officer is to help you get the money . They're everything dealing with money , whether it's the loan for the house , the downpayment assistance programs and your realtor . They're here to help you get the house . So the loan officer , they're the money man , the real estate agent , it's the house man or lady . But just remember those two things .

Speaker 1 49:56

Also , one last thing when you're picking your loan officer , it's really important to pick a loan officer that specializes or that is familiar and comfortable with downpayment assistance programs . All right , and that's if you know that you want that particular resource . Because if you know you want access to that resource and you pick someone that's not good at it or this is not what they do , they're going to try to talk you out of it . Well , that's not a good idea . Why do you want to do that . That's not the route that you should go . That's because they don't know how to do it , or they don't feel like doing it because there's extra steps involved , or maybe they haven't taken certifications to be on the preferred lenders list for that program and so they're going to talk you away from it , and that's not fair to you as a consumer .

Speaker 1 50:44

So , as a consumer , you want to make sure that you're working with someone that has access and knowledge to all of the resources . So , even if you choose to not go with a downpayment assistance program , it was presented to you as an option , so you can make an intelligent decision to compare with assistance and without assistance . You make the decision if you want to use it or not , not that it just doesn't get presented to you because the loan officer doesn't feel like doing it or doesn't know how to do it . So that's very important too . That's something you want to ask . Are you familiar with downpayment assistance programs ? And you know I think that's good for today . It's good for today because I don't want to overwhelm you , but again , start that journey , get prepared .

Speaker 1 51:26

Preparation is key and I'm always here to answer questions , even if it's something simple , even if you want pointers or tips on what websites you should monitor your credit on . Maybe you know for a fact like you didn't even have to monitor your credit you know without the shadow of a doubt that your credit score is janky and you need some help . And it's like , okay , if I need help , it's not the question . I definitely need help and you're just looking for a trusted professional . Reach out to me . I can connect you to somebody that is amazing , that has been in the industry for a long time , that has proven results , that has integrity , that's not going to run off with your money and make all these promises .

Speaker 1 52:06

And there's a difference . There's a difference between someone , I guess , fixing your credit and assisting you . You know , with your credit Right , nobody can just fix it and wave a magic wand , but you all , you want someone that , yeah , maybe they do know certain strategies to help fix certain situations , but you want also someone that can guide you along as well , because there are things that you're going to have to do on your credit journey and I'm venturing off to a whole nother topic here , but whatever , there are things that you're going to have to do on your credit journey that a credit professional can't just fix for you . They just can't get an item deleted . You know it may be .

Speaker 1 52:48

Hey , you haven't made your payment on time on your truck note in the last six months . I'm going to need you to start making your car payment on time , you know , consistently . So there's some things that you're going to have to be real with yourself about as well . So just because you get hooked up with a credit professional doesn't mean it's going to be the magic one to fixing your credit problem . You know it's going to be some things that you have to commit to and do as well , and you have to remember that .

Speaker 1 53:14

Like , if you haven't , you got to start with the current bills that you have . If you haven't been paying your current bill on time , it may be a Victoria Secrets credit card and it's like oh , no big deal , I pay it when I pay it , but on your credit report it shows that you have not paid this bill on time in the last four months and that's $50 a month . Why would someone in a home loan environment approve you for $300,000 ? Were you going to owe them almost $3,000 a month and I don't trust you to do it . You can't even pay your $50 a month card on time and you want me to give you a $3,000 a month loan liability ? No , you have to show me that you're responsible . So you got to keep those things in mind too . So start getting really , really serious about paying your bills on time . And sometimes I know things happen .

Speaker 1 54:08

So if you can't pay on time , let's say you do have a car note and it's due on the fifth of every month and you just don't have it right now . Just as long as you pay it before the fifth of the next month . Right , you want to beat the 30 day delinquency . You do not want it to get 30 days past due . Once the account is 30 days past due , that's when it shows up on your credit as a late payment account . So just keep that in mind on your home journey too

Credit Deadlines and Catching Up

Speaker 1 54:38

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Speaker 1 54:38

Every day won't be perfect . Maybe there are some things that you're kind of behind on . You're trying to catch up . That's fine , you know so . For example , your , your , your car note is due on the fifth . It can be the fourth of next month , as long as you pay it on that fourth . And I'm not encouraging to pay your bills late , but just know , as long as you beat that 30 day deadline . Uh , it won't show up on your credit , on you . So , again , hit me up if you need it . I'm here as a resource and you've been tuned into the throne . I'm your host , natasha LaQuinn , the queen bee of real estate , and we will catch you next time . Bye .