We have helped many buyers and have seen a lot of things that they go through. We’ve seen sad moments and happy moments and these are some of the frustrations that home buyers go through.
Why is buying a house so stressful? Buying a house is so stressful because you have to get pre-approved and it requires many documentations. There are also a lot of surprises when it comes to the home inspection, appraisal, and financing. You may spend years of budgeting and saving to make the down payment. The whole process of finding the right home in the right price range, school district and neighborhood, layout and features is an ordeal by itself. It may be that what you’re pre-approved for only buys a home in which the condition is less than what you expected. Once you do find the right home, you might not be the only buyer making an offer on the home. After the home inspection and appraisal, it’s possible that you might get denied financing. Interest rates are rising and you have to choose whether you should lock in your rates.
There are a lot of factors when it comes to buying a home and each step in the process can go sideways. But understanding each one of those before it happens can often help prevent the situation.
Financing Documents Preparation
The first step to buying a home is submitting the proper documents to the lender. In return, the lender will provide a pre-approval. Lenders will require a lot of documentation. But putting more work into getting a clear understanding what you are approved for can save you time. You can look for a home before talking to a lender. But you might waste time looking at homes out of your price range or you could be approved for different houses and the home search process has to start all over.
Finding The Right Home
Buying a house is challenging because it takes many years to save up for a home. If you want to buy a house today, you should have started saving a few years ago. You’ve spent many years saving a large about of money to buy a house. As a first time home buyer, you might not have the 20% down for a home. A house priced at $500,000 means that 20% down is $100,000 out of pocket, and that’s a huge amount of money. However buying home doesn’t include just a downpayment, it includes the closing costs such as loan fees, title fees, escrow fees, and or reserves. So if you’re not putting 20% down, you will be paying private mortgage insurance (PMI) and this amount can be $300 to $400 dollars per month. The monthly PMI will is taken into consideration and will affect how much you can borrow and that is usually much less than you expect.
Home Inspection and Appraisal Surprises
The home inspection response time and issues that arise can make buyers feel uneasy. The inspection contingency generally allows you 10 days to do the inspection and respond with requests within that time frame. In a faster real estate market, the time frame can be reduced to half to make the offer more competitive. All parties, the agent, home inspector, and buyer are rushing to get the inspection done to reply within the time frame without losing earnest money.
After the inspection, the home inspector might have a list of issues on the inspection report. The roof might only have a few years left and needs to be repaired or replaced. The hot water tank may be leaking or the foundation might have cracks in them.
Be prepared for the negotiation process after the inspection has been done. It’s possible for the seller to fix all of the items on the inspection report. They might fix some of the items or they might not fix any of the items at all.
During the appraisal process, it is possible the appraisal can come back with a low appraisal. The price that was agreed upon is higher than the value that the appraiser appraised the house at. For instance, the mutually agreed price was $550,000 and the appraiser’s price was $540,000.
Downpayment & Private Mortgage Insurance
Why is finding the right home challenging? Finding the right home for your family can be the most fun part of your life, but that doesn’t mean it doesn’t come with difficulties. First off, what does finding the right home mean? What is right for you? Over the process of searching for a home, you will discover what you don’t like and what you do like. But when it comes down to selecting a home to make an offer on there are going to be a few things that you don’t like about the home. Also, the home might be the right home, but it’s not in the school district that you would like. Conversely, the home is in the school district that you want but it is not the right home. We do have buyers who look at many homes and get overwhelmed with looking at so many homes and not finding what they are looking for. Especially in a low inventory market, finding the right home is even more laborious.
You’re Not The Only Buyer
In a perfect world, you are the only buyer who likes the home and you are the only buyer who made an offer on that property. In a hot market, this isn’t always the case. There are lots of other buyers looking at and making an offer on the same home. Sellers can often receive five or more offers on their home. Finally, you’ve found the home you are looking for and the listing agent tells you that you are in a multiple offer situation. What do you do to get this home because you have spent weeks looking at homes and this home is perfect for you family.
Other buyers are trying to make their offers more competitive by changing the price, waiving contingencies, and doing whatever they can to get this property. They might even want this home more than you do because they have lost out to five other homes before submitting an offer on this home. They are willing to buy the house as-is waiving inspection and financing. The listing agent then calls your agent and says you didn’t get the house.
As a home buyer, the bad news can be devastating. You’ve submitted your highest and best offer and waived as many contingencies as you can and still didn’t get the house. So the journey starts all over. And if you are losing out on houses that you submit an offer on, many times this can make the home buying process very stressful.
It’s the week of closing, you are waiting for the lender to see if your loan has been approved by the underwriter. If there are any outstanding conditions that may be requested by the underwriter and this may delay closing date. You have to be there to sign the stack of closing documents and have to pack up and move all at the same time. How do we know when to start packing? What if the loan doesn’t close? There can be a lot of factors that can cause buyers to be stressed.
What is the most stressful part of buying a house?
The most stressful part about buying a home is often the anticipation period of the loan approval. All parties have worked so hard to put everything in place for you to buy the right home and everything you’ve done up to this point hangs by a thread based on the underwriter’s approval.
Why does it take so long to buy a house?
Buying a house takes a long time because there are a lot of factors involved. Finding the right neighborhood, finding the right home with the right features for your family, making sure you are buying a safe home, making sure you are paying a fair market price, and the lender has to make sure that you can actually pay for the home.
What are some common reasons the transaction falls apart?
A transaction can fall apart because of the inspection (major repairs that need to be done), a low appraisal (the bank doesn’t think the home is worth as much as the price you offered the seller for), or failed financing (the underwriter has looked at your financial situation and for some reason denied your financing). Here are some reasons why your mortgage got denied.