Do you wish to have a house of your own before Labor Day? If so, then hurry up because September 3rd is around the corner!
Lenders are taking longer to approve mortgages
In some cases, lenders will give their approval in 30 days. If it takes longer, the lender may increase the initial loan’s rate by a fraction of a point, making the loan more expensive. The approval process becomes a major problem for those who intend to buy the house before school begins, or prior to their new job. Sellers are at a disadvantage too, since not only does it take more time to finalize the loan but the number of loans approved is reduced, due to underwriting and appraisal norms. This fact also keeps the seller from finding other prospective buyers, as they would not be interested in a house already under contract.
Keep control of unexpected expenses and inconveniences
The seller can assure himself of the buyers’ ability of purchasing the house by demanding a lender’s pre-approval. Information like the applicant’s salary, properties, and debts are mentioned in a pre-approval. A pre-approval is a far safer measure for the seller than a pre-qualification, as it clearly states the applicant’s financial means in a legal way and not just taking the borrower’s word about his monetary situation.
Home appraisals are more important than ever
Equally important, both parties involved in the transaction should ensure that the house appraisal is high enough to satisfy the lender who most likely will lend only about 80% of the house’s appraised value. Make sure the house is not worth less than what you are paying. In order to be sure that the appraisal is correct, compare house prices in the same area, information provided by sites like Zillow.com and Truila.com. Also, if you’re the buyer and the appraisal proves to be lower than the initial sum, make sure you have cash for necessary increases in down payment.
Have your financial documentation in order
In order to facilitate the purchase of a home, provide the lender ahead of time with all the required documents like testimonies from previous lenders, tax returns, names of the bank you usually deal with, brokers. As a buyer you should be prepared at all times to make the lender’s job easier by having all the documents ready whenever needed and request an income verification from your employer. Before settling on a certain lender, make sure to inquire around as there are some lenders that manage to approve a loan in less than 60 days while others will move slower.
Check around for the right mortgage broker
Ask your real estate agent or mortgage broker for mortgage companies they can recommend, or take matters into your own hands and personally phone mortgage brokers to inquire about their deadlines. Don’t limit your search for renowned banks that are usually crowded with loan requests, but focus your search on smaller ones and credit unions as people don’t generally apply to those. Your aim is to find the best deals possible so don’t feel constrained to use the same bank you usually appreciate.
If your approval for a loan is really urgent, you can always apply to a lender that requests a higher fee for his rapid services. However, make sure you don’t get a higher interest rate than necessary, just to obtain your loan faster. In 30 years time, a higher rate can really add up . Every $100,000 borrowed at a rate of 4% would cost you $477 a month and at a 4.25% rate, it would be $492. Multiplied by 30 years, interest charges would reach nearly $5,230. The bottom line is that it’s important to check around for the right mortgage broker that will work hard for your business. In order to close on a home sooner, rather than later, a mortgage broker that has strict deadlines and is aware of all of the current mortgage programs is critical.