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January 2022

Breaking it Down: The Home Buying Process from Loan to Close

1000 500 Taylor Witt

Buying a house is one of the most exciting steps you can take. Unfortunately, the home buying process can be confusing for those who have never purchased a home before. The good news is after you’ve purchased your first home, buying your second home is easy. Not sure what goes into buying a house? You’ve come to the right place. This article will break down the home buying process from loan to close. 

Before the Loan

Before you can buy a home, you’ll need to determine whether or not you can afford it. To determine how much you can afford, you can use an online calculator that will tell you how much home you can afford based on your income and credit score. But, of course, other factors affect whether or not you’ll be able to afford a home, such as debts. 

You should be able to easily determine your debt-to-income (DTI). Take a look at your current debt versus your income and consider how much money you can afford on a monthly mortgage. Make sure to include everything in your estimate, including groceries and student loans. Remember, buying a home is more expensive than renting one, and there are costs that renters don’t pay, such as home repairs. 

Next, you’ll need to save for a down payment. Most loans require at least a 3.5% down payment, but it’s typically best to put down 20% of the home’s price so you can pay less on your monthly mortgage bill. If you’re a veteran who qualifies for a VA loan, you might not have to put any money down at all. 

Getting a Loan

When you’re ready to apply for a loan, make sure you get pre-approved first. Getting preapproved will allow you to start house hunting, knowing approximately how much of a loan you can get. A pre-approval letter states how much you’re approved for based on credit score, income, and other factors. Give a copy of your pre-approval letter to your realtor so they can help you find homes within your means. 

To get pre-approved, you’ll apply with a lender of your choice. The preapproval process is typically easy and involves answering questions on an application and speaking to a mortgage professional. A mortgage company will often verify income, credit, and assets with documentation you’ll need to apply, so make sure to have these on hand:

  • W-2s
  • Pay stubs
  • Income statements
  • Account statements

There are many different types of loans available for homeowners, so it’s up to you to determine which one is right for you. However, your mortgage loan officer will give you recommendations based on your financial situation. These are the types of loans you may qualify for:

Conventional Loan

Conventional loans are the most popular option for buyers. While the typical conventional loan requires you to put down 20%, many mortgage companies allow you to put down as little as 3%. 

FHA Loan

FHA loans are backed by the Federal Housing Administration (FHA) and are ideal for new homebuyers because the credit score and down payment requirements aren’t as strict. You can put down as little as 3.5%. 

VA Loan

VA loans are only available for qualifying veterans, active-duty members, and their spouses. Many veterans opt for this type of home loan because it doesn’t require a down payment. 


USDA Loans are another government-backed loan that can help individuals purchase their first home. USDA loans require 0% down. However, the home you purchase must be in a rural area, and homebuyers must meet income requirements. 

Finding a Realtor

Homebuyers should always work with a qualified realtor because they don’t have to pay the commission fee. Home sellers pay the realtor fees, making finding your dream home easier. Of course, you can find and purchase a home without help, but a realtor can help you find homes that meet your budget and criteria, take you to showings, and help you negotiate. 

Knowing the Market

As home prices continue to rise, having an awareness of the current housing market is a fundamental skill if you are trying to purchase a home. Currently, it is a seller’s market, and homes are going fast and often for above the asking price. Many factors contribute to the rising cost of homes and the competitive market. For example, Address Scoop’s report on the millennial generation found that more millennials are of home-buying age, making the demand for housing high and the supply low. Inflation and low-interest rates are also contributing factors.

House Hunting

With your mortgage pre-approval in hand, you can begin looking for houses within your budget. Make a list of your top preferences in a home, but keep in mind if you’re on a tight budget, you may not be able to get everything you want. When hunting for a house, consider:

  • Price
  • Size
  • Condition
  • Number of bedrooms
  • Access to grocery stores, schools, and other places
  • Property and real estate taxes

If you’re working with a realtor, they will consider your preferences when house hunting for you and only show you houses that meet certain criteria. 

Making an Offer

Once you find a house you like, it’s time to submit an offer letter to the sellers. An offer letter tells the sellers about who you are and what you’re willing to pay for the home. You can also include a personalized letter for why you want to purchase the home. Your offer letter will also include a deadline to tell the seller when you’d like a response. 

Once the seller receives your offer, they can either:

  • Accept the offer
  • Reject the offer
  • Negotiate 

Getting a Home Inspection

Some lenders require you to get a home inspection before you receive your loan. However, even if your lender doesn’t require it, it’s still something you should do so you can know about any repairs you’ll have to make as the home’s new owner. 

An inspector will go through the house and look for issues, testing electrical systems, roofing, and appliances. After the inspection, you’ll receive a list of problems they found. If there are any serious issues found, you might be able to negotiate with the seller to fix the issues before you close. 

Getting an Appraisal

An appraisal tells you the home’s current value and is a requirement of all lenders. Getting financing can become more difficult if the home is appraised for lower than your offer. Your offer must be thoughtful, but you can also contest the results of an appraisal if you believe it’s too low. 

Closing on the Home

Once you’ve followed through with all of your lender’s requirements, you’ll receive a Closing Disclosure. This document informs you about how much you’ll pay at closing and summarizes your loan terms. Make sure to read through your Disclosure and ensure the numbers aren’t too different from your loan estimate. 

You’ll then go to a closing meeting with your lender and bring your ID, your Closing Disclosure, and funds for paying your closing costs. 

Once everything has been verified, you’ll sign a settlement statement and pay your down payment and closing costs. Next, you’ll sign the mortgage to secure your mortgage note. Finally, once closing is over, you officially own the home. 

why real estate agents fail

9 Tips to Put Your Realtor Career Back on Track

1000 500 Taylor Witt

If you’re a successful MN Realtor, you may not often ask why real estate agents fail. If your career has stalled, however, check out these nine tips to help you get back on track.

Don’t Get Complacent

Failing Realtor Easy Job

First, we have to warn you to be aware of how your market works. Did you know that 93 percent of real estate deals are done by on seven percent of your colleagues? In other words, you may be one of the large group of agents that are fighting for seven percent of the business. Don’t ever think that times are so good that you will always have enough business, because a bad economy can knock you down in a hurry. To be better positioned for a downturn, and to help you be the best you can be, follow these guidelines:

Back to Basics

You don’t have a “normal” job — you have a lifestyle. While a new study from GoodHire showed that Real Estate pros might be most unhappy with their bosses, we urge you to remember, you are kind of like your own boss when it comes to real estate and selling roles.

You have to learn how to use the best productivity apps to get things in motion and carve things out for yourself. Plus, it’s all about you, and if prospective clients don’t like you for any reason, they will go elsewhere. Cultivate and develop your personal brand and realize that it’s your job to make clients happy; while you’re in it for the money, that money will flow faster if you put your clients’ needs first. Treat your clients right and you won’t need to spend your spare time taking paid online surveys for extra bucks.

Remember — this can be one of the greatest careers on earth (just click play below and find out why).

It IS Your Job

So your contract says the clients have to prepare for an open house, and when you get there, you see a mess in the kitchen with a load of dirty dishes. Great Realtors step in and fix the issue without lecturing the client or referring back to the contract. Do whatever it takes to get the job done.

Respect the Big Picture

A string of unclosed deals doesn’t mean you are a failure. If you really want to know why real estate agents fail, one reason is that that they become mired in a few deals that have not closed. Your next listing will turn out better!

You Can’t Cancel

Clients can cancel meetings, but you can’t. Always be where you say you are going to be, and don’t be late. Client-facing time is invaluable, so don’t waste any opportunities.

Don’t Over Promise

A Realtor had a lead on a condo listing. He told the client, “OK, I’ll be there with my maintenance guy and my lead painter. We’ll tell you exactly what you need to do to get your unit ready for sale.” When the Realtor met the client at the property, the agent was alone, and said, “Sorry, my guys were stuck on another job and couldn’t make it.” No client wants to hear the words, Well, what had happened was…” This Realtor instantly lost his credibility.

Learn How Marketing Works Today

Real Estate Marketing

You can’t just read an AdWords article and expect to be able to do a proper AdWords campaign. Learn what your Facebook page needs to look like in order to be effective. Do you know what social media really consists of? Do you have an up-to-date website? If you move slowly in a fast-paced world, you’ll quickly find out why real estate agents fail.

Be Available

Some clients like to talk by phone. Others prefer email. Some like to text. Some use platforms like Slack to instant message. Can you do all of this stuff correctly and efficiently?

Know Your Market

Real Estate Market Trends

That’s a no-brainer, right? Check this out: You just sold a big suburban home for a wealthy client, but they have a campus-area four-family that they want to get out of. You took the listing, but frankly, you know nothing about that area of town. If you don’t want to be on the list of why real estate agents fail, make sure you do your homework quickly and learn that neighborhood, or you may be a one hit wonder.

All businesses and careers have rough patches. Make sure you can get through bad times by getting back to the basics and ensuring that you are consistent  and well-liked by your clients. And remember, just as good times don’t last forever, a period of slower sales will improve if you are diligent.