In the good old days, (well, not so old, really) we wrote offers for properties without mortgage contingenices and then planned to close within several weeks. But since the beginning of the mortgage crisis last August you won't get a quick close with mortgage financing.
The process takes time, as it should. Lenders have been lax with lending practices and now we will be seeing real vetting going on with potential buyers.
Unlike recent memory, buyers now have to actually qualify for their mortgage, and this approval process takes time. Here are some things that I have been telling my clients to think about before they make an offer:
- You will need good credit.
- You will need verification of employment, down payment, closing costs and reserve funds.
- If your money has not been in your bank account for several months, some banks will require proof of where it came from.
- The appraisal and underwriting takes 2-3 weeks and sometimes a second appraisal might be ordered.
- The lender might require additional documentation - be prepared to give them whatever supporting documents they need at the last minute. As an example, if you've recently paid down a credit card bill to a zero balance you may need proof of that.
- Some lender requests may seem outrageous - just go with it.
Lenders have a lot of due diligence work to do to restore their credibility with investors. The housing market is dependent on investors buying mortgages so that buyers can buy homes. Having buyers properly qualified for a mortgage is the key to the whole process.
If you would like the names of several good lenders, call or e-mail me and I'll give you their contact information. If you think you may buy next year, now is not too early to start checking into mortgages.
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