The real estate market is always changing.
The pendulum swings back and forth in favor of buyers or sellers and sometimes gets stuck in neutral, which is where we happen to be currently.
Inventory is up, demand is down and the strong seller’s market has shifted into a more neutral market.
Home mortgage interest rates have been slowly creeping up. Christmas decorations are already flying out the doors of Costco, so you know the holidays are creeping up as well.
However, buyers should not be lulled into believing that they can just find the home of their dreams and quickly have their agent write up a winning offer without having all of their financial ducks in a row.
Here’s an update on what you need to have in order to make a competitive offer.
1. Figure out how much you can afford to spend every month to pay your mortgage, principal and interest, your property taxes, your homeowner’s insurance and homeowners association dues.
2. Figure out how much money you have for your down payment and closing costs. Don’t forget your piggy bank and retirement accounts.
3. Figure out where your down payment and closing costs are coming from.
If you are liquidating some assets or borrowing from a retirement account, understand the process and timing for requesting and receiving the funds. Print out and complete the forms so you can submit them as soon as possible.
If you are borrowing funds from family members, make sure you know how much you can legally receive without any state or federal income tax consequences.
If you are moving money around from different accounts, understand how these movements will impact on your creditworthiness.
4. Get pre-approved by a lender, not just pre-qualified.
You can choose the mortgage representative at your bank or credit union, find a lender on the internet, or ask your Realtor for a referral.
To get pre-approved, you’ll need to fill out a loan application, submit your checking, savings and retirements accounts, submit your tax returns, submit your pay stubs, and allow the lender to run your credit.
If you have a freeze on your credit, you’ll need to remember your password to unfreeze it for the short time it will take the lender to access all three credit bureaus.
Providing all these documents to get pre-approved will make you a competitive buyer.
5. For extra credit, get your loan file approved by the underwriter.
Submitting your offer with a fully underwritten loan, with conditions such as a fully executed purchase contract and an appraisal, is the strongest offer you can make without paying cash to buy the house. Ask your lender what it would take to get underwriting approval.
Now you are ready to go find your dream home!!