Financing? Stay CALM!!

Posted In:
June 25, 2014

If you’ve never bought a house then you probably aren’t accustomed to the stress associated with spending your entire life savings on one thing. One thing that may have some major issues attached with it, OR that could be your dream home for your Leave it to Beaver dream life.

Unless you’re rollin in cash, you’ll probably need financing. Financing is the MAKE OR BREAK of a deal. Right now I’m dealing with two financing extensions on two sales, and let me tell you if you think you’re closing Friday, and then you find out that You’re NOT, panic ensues.

I wanted to share some ways to avoid financing issues for buyers, I hope these tips help!

1. Research your lender, find out if other people you know have used them and have had good results. Good reviews, or friends with positive experiences are a good place to start.

2. Find a lender who is RESPONSIVE. If you send your potential lender 3 emails and 2 phone calls and they don’t get back to you quickly, find another lender. When crunch time comes, you want someone who can get back to you quickly so you don’t lay awake at night biting your finger nails.

3. Get the paperwork in early! This isn’t like studying for final exams in college, the day before = no bueno. EARLY, EARLY, EARLY, as soon as you know your lender needs something, SEND IT. Don’t procrastinate on getting papers into your lender. The sooner you have everything in, the sooner they can send it to underwriting. (The Underwriter controls the financing, and is basically the ¬†dream crusher or magical wizard of the deal).

4. Don’t spend up a storm while you’re trying to get financing, don’t quit your job, don’t get fired, don’t be an idiot! You heard it here first, when you’re trying to get a loan you need to keep all of your finances in order. The lender will need your final pay stubs, and account info right before closing, so just because you are pre-approved doesn’t mean they are going to give you the loan. Don’t mess it up by buying a new car, or going on a shopping spree, or being a dumb ass. You’re welcome in advance.

5. Construction Loans. If you’re getting a construction loan get your contractor lined up in advance. If your contractor is also a dumb ass, you’re screwed. Banks like paperwork, they like people who are legitimate and not your uncle’s friend Joe the handyman. There is paper work involved, they need licenses, estimates on paper, etc. etc. If your contractor isn’t good at that type of stuff, if he’s an illegal, if he doesn’t have an email, if he can’t put estimates on paper, find another one (trust me I love the inexpensive people as much as the next do it yourself-er, but the banks don’t). You need an organized contractor who can handle the paperwork, do it properly and not mess up your loan.

6. Have a good attorney. If you are buyer, some people think they don’t need an attorney. If you don’t have one, you should get one. Sometimes the banks will suggest an attorney to review the P&S for you, which is fine, as long as that attorney is responsive to your questions and needs. If you hire a separate attorney to represent you, a lot of times they are more willing to spend time making sure you understand what is going on. It really depends on the attorney, just like it really depends on the real estate agent (most are terrible some are REALLY good). Everyone hates lawyers until you need one to save your deposit, or fix your purchase agreement, and then you love them. Get a real estate attorney, not someone that does divorces and has never negotiated a P&S.

7. Financing contingency date – KNOW IT, LOVE IT, DON’T FORGET IT! This needs to be a more important date than your wedding date. Do not miss your mortgage contingency date. If you don’t have financing in place by this date, make sure your attorney or agent requests an extension. If you don’t request this extension in time…stab someone because you may lose your deposit.

Hopefully this was helpful. The most important thing is to have a good team behind you when buying. Get an agent that knows what they are doing, get a good real estate attorney, and research your lender and make sure they are responsive.

Mortgage shake down

Posted In:
October 7, 2013

Rates, rates, rates!

Unless you’re lucky enough to be a cash buyer, most of us have to get financing when purchasing a property. Naturally, rates area always a hot topic of conversation when starting your search. Getting a pre-approval is usually the best way to start so that you can know what you can reasonably afford to spend. Depending upon where the lending market it at can make or break how much you can afford to spend. ¬†Over the last few years the rates have plummeted which has helped contribute to a “buyers market.” For the last year or so we’ve been hovering in the mid 3% on a 30 year fixed rate. This is a historically low rate which has sparked a lot more buyers to enter the market. When it’s inexpensive to borrow money, more people do it!

Great chart showing rates over the last 30 years.

When borrowing money is at an 18% interest rate, the amount at which you borrow drops dramatically. As the summer progressed and more and more sales were taking place the interest rates took a quick jump into the 4.75% range which made buyers nervous this was the end of low interest rates. As the market continued to progress the lack of inventory and more buyers trying to get into houses forced the prices of homes up further. As of right now, rates are back down to 4.2% and prices are stabilizing. Sales however have not seemed to slow down as they traditionally do heading into the fall.

We’ll have to wait and see how the year concludes!