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Buying in a Hot Market

  My most recent post mentioned that our area had achieved a rare feat-being included in the top 20 hottest markets in the U.S. If you are a seller that is great news! If your home is priced right you should experience a shorter market time and if you are really lucky you may even receive multiple offers. But what does this mean if you are a buyer? 

It means that you, Mr. or Ms Buyer need to have your financial ducks in a row. It means you don't make an offer until you have visited your lender to know your price range, the type of loan product you are going to use, as well as any credit issues that could slow down the process. It means that your down payment should already be in the bank or the source of your down payment should already be identified. It means if you need to ask your seller to assist you with closing costs, you have an idea of what those are.

I understand that the most exciting part of buying a house is looking at properties. However, if you haven't done your homework on the financial end, you may lose the opportunity to submit an offer on a home you love. In the type of market we are currently experiencing, sellers won't bother with buyers who can not produce a pre-approval letter.

Who should you call for a pre-approval? There are obviously many choices ranging from your local bank to large lending institutions that are national in scope, to online possibilities. Interest rates and closing costs vary from locality to locality. It is important that you have done your lender shopping prior to selecting the home you are going to buy. Here is a bit of truth-it is about more than the interest rate. Most lenders are going to be within about 1/8th of each other on interest rates. If you find one that has a large difference in rate from everyone else, there is something you don't know yet. Maybe it is a different loan program or perhaps there are fees known as discount points attached to the rate. Be sure you know all the facts. It is also important that you are able to speak personally with the same person throughout your transaction. A mortgage loan file is complex. It contains all the financial quirks and specifics of each borrower. It isn't something that someone who is unfamiliar with the file can just jump into and give you good information. As automated as some lending can be, person to person contact produces the best results.

Let's say you want to write an offer, but the price is at the top end of your affordability. You really want to know the payment before you commit. But you can't reach anyone at your online lender. In this market, waiting a day for a return call could cost you the house.

Mortgage Banks such as Hallmark specialize in mortgages and customer service. We aren't worried about your checking account, or your credit card or selling you services other than mortgages. Be prepared to buy in this hot market-while financing is the boring part of the process, it is also critical to your successful offer.