I hope you understand my humor in the headline today. Can you image what our parents would say if we told them just 20 short years ago that we’d have a shortage of homes, historically low interest rates, and lender rebates for buyers? It would have been unheard of.
But it’s exactly what we’ve come to expect as the new normal. Interest rates are still hovering around the 3.5 percent range. The rates are so good that many buyers are able to receive rebates as well. That’s like getting paid to take out a loan!
When it comes to buying a home your loan will be the biggest impact on the purchase. So choose your lender wisely and shop rates. Typically two or three lender quotes will give you a good idea of which loan is right for you.
When working in today’s seller’s market with microscopic inventory it pays to be creative. If you are a buyer and struggling to come up with the down payment it will be almost impossible to ask a seller to give a credit back to help cover your loan closing costs like we typically did only six short months ago.
But how creative would it be to write the same offer without asking the seller for a credit but instead received a lender rebate large enough to cover the loan closing costs?
This little tweak on writing and presenting your offer just might make your next offer more appealing to a seller ... and get your offer accepted. Believe it or not this is happening for a few lucky buyers that decided to shop rates and choose a Realtor willing to think outside the box.
Another tidbit of information when looking at the loan process is to have the right mind set. Accepting the redundant documentation necessary for the lender approval will make everyone’s life easier. With today’s tighter lending guidelines requiring proof of all information, don’t be surprised when detail after detail is required. So if a lender asks for a bank statement and there are five pages for that bank statement, send all five pages, and not just the summary. If you send the summary be prepared for a redundant request because the original information requested wasn’t received.
The reason the mortgage approval process is now so rigorous is simple. Avoiding defaults has become the primary goal of mortgage lenders. Higher standards are reducing loan defaults, which should mean fewer foreclosures in the future. Government data shows that less than 2 percent of loans originated in 2009 went into default after 18 months, compared to 22 percent for 2007 loans.
I hope I’ve inspired you to take advantage of all the wonderful opportunities this real estate market has to offer. Remember, it’s not your mommas market. So don’t let what we used to do hold you back in our ever changing market. Adapt.
Sheri Aguilar is the president of the Lodi Association of Realtors and can be reached at Sheri@YourLocalAOR.com