Buying a home today is much different than it was just a few years ago. Today, buyers have to consider many different options as they choose a home.
For instance, do you go after a Short Sale or Foreclosure, or possibly a FSBO? Do you attempt to negotiate with a seller who has had their home on the market for several years and is still in denial that the markets have corrected from their highs in 2005? Either way, buyers have a lot to consider in their hunt for a home that is right for them.
Even after the wave of foreclosures and resulting issues with mortgage backed securities, buyers were still having a relatively easy time navigating the mortgage process. With the availability of programs such as FHA and USDA Rural Housing, qualified buyers with modest means were still able to obtain a mortgage.
Now, you just had to have good enough credit, a steady employment history and sufficient income to be able to afford the monthly payments. We had moved into a period of “responsible lending.”
There are many issues facing the mortgage industry today, including the possibility of lowered loan limits, as well as penalties — in the form of higher interest rates — for borrowers who put less than 20 percent down (Google “Qualifying Residential Mortgage: QRM”).
As the densest and one of the most costly states in the country, this combination could have a dramatic effect on buyers in the Garden State.
Gone are the days when a lender can pre-qualify a borrower, order rush appraisal and put a loan through automated underwriting to close a deal in a few weeks.
Everything is being scrutinized today, and buyers are being asked, re-asked and asked again for the same information as the lenders do everything they can cover themselves.
The buyers seeing the greatest impact are those that are either self-employed or have more complex financial profiles.
So if you are in the market to purchase a home and are planning to use a mortgage, there are a few things to consider.
First, be prepared to have every facet of your life scrutinized. As long as you go into it with this expectation, you can reduce a lot of the stress and frustration during the underwriting process.
Next, if you know that you will be buying in the next few months, be mindful of your banking habits. The lender will likely ask you to explain any unusual deposits or withdrawals.
So, if you’re the commissioner of your fantasy football league, consider letting someone else hold the purse this year, because something as innocent as that can cause you real trouble down the road.
Lastly, consider the amount of time you give yourself to settle a transaction. The days of the 30 day settlement are all but over (unless you pay cash), so using a very short closing period to show the sellers you are serious, can backfire on you.
Establishing a relationship with your lender early in the process will be the key to successfully meeting your closing date.
They will be able to evaluate the type of property you are preparing to make an offer on and will be able to guide you on how much time they feel it will take to meet the various deadlines in your offer. This way, everyone is on the same page and you are able to demonstrate to the sellers that your financing will not be a concern for them.
If you’re going to take advantage of today’s lower home prices and historically low interest rates, you will need to be able to navigate the mortgage process to get there. But as long as you have a lender and Realtor on your team early, you will give yourself the best chance at succeeding in today’s market.
—Submitted by Brian Groetsch, president, Cape May County Association of Realtors.
Cape May – Governor Murphy says he doesn't know anything about the drones and doesn't know what they are doing but he does know that they are not dangerous. Does anyone feel better now?
