(Originally Published October 11th, 2011)
The world of real estate can be simple and complex. Each transaction is different and there are a myriad of things that can derail any home purchase. Any broker in Fort Collins could tell you crazy stories as to why some of their home buyers had deals fall through. Most problems can be solved with cooperation and negotiation from both sides, but what are the biggest home buying deal breakers in Fort Collins? Continue on…
Overall Home Condition
Depending on your loan scenario, the home condition has a huge part to play in the loan process. Remember, a lender is using the home as collateral in case you default on your loan. If the home has been left in pretty rough shape, the bank can make the decision not to lend money to you for your purchase. Some of the biggest issues are roof problems, exterior paint peeling, and foundation or structural defects. For FHA and VA loans in Fort Collins, the home will need to be in a reasonably good condition for you to receive a mortgage. When a bank owned foreclosure mentions that the home is “as-is” it really means it. Don’t expect the bank or asset manager to do any repairs, so make an offer accordingly.
Getting Approved for a Loan
Built into our State of Colorado contract, there is a contingency saying that if you’re unable to qualify and obtain a loan, you can back out of a purchase and retain your earnest money. In some cases, you will receive initial pre-qualification but through the loan process, a credit issue, judgement or other type of qualification flaw may be found. In this case you may not qualify for the loan you thought you could originally, and you’ll either need to cancel the contract or delay closing until the issue can be resolved. The only way to be proactive about this scenario is communicate early and often with your mortgage originator and processor, so they’re aware of your entire financial picture. The faster you are in getting everything to the lender, the quicker they will move.
The Appraisal Comes in Low
Over the course of the past few years, after home prices continued to fall, appraisals became a much bigger issue in Fort Collins. Compared to distressed properties (with decreased sales prices) appraisals have been coming in lower and lower. The appraisal is a professional opinion of value for lending purposes. If a lender needs your home for collateral, this is how they verify that it is worth lending on. If the appraisal comes in low, it means the bank will lend you less money, and you’ll either need to come up with the difference between the lending limit and purchase price, or cancel the contract. The listing agent wants the home to appraise, so it is in their best interest to do whatever they can to share comparables, and market data with the appraiser to help the appraiser better understand the current market value and trends.
There are several different snags along the way, but working with the right professionals will help mitigate risks and help you get through your purchase – avoiding these 3 home buying deal breakers in Fort Collins.
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