A recent blog by David Burrows talked about "A Doctor's Advice For Purchasing a Home." It was an excellent, well-wriiten posting, and inspired this blog of mine. Getting your financing in order is the first order of business for home buyers today. Here's why.
Back in the heyday of the real estate boom years, credit was easy to obtain. With rapidly appreciating real estate, even over-extended borrowers were likely to cover their mortgage balance and even make a tidy proft when they sold their homes. Underwriting scrutiny was not very intensive, and the money was flowing freely. Then the bubble burst, and the lending world changed--dramatically.
Today's buyers are being scrutinized like never before by lenders and their underwriters. These potential buyers are being held to much higher credit standards than the borrowers of yesterday. Gone are the days of the "80-20" mortgage, or the stated income mortgages of the past. Savings and checking acccounts are scrutinized; credit histories are examined in great detail. Monies to be used for down payments have to be accounted for: where did they come from; how long have they been in the bank? Were they a gift or a loan, or the product of actual savings?
Today's buyers are being much more thoroughly assessed for credit worthiness than borrowers from yesteryear. With so many homes already having been foreclosed, no one wants to see more foreclosures. So the lending practices and standards have evolved and lenders now expect strong credit scores, savings in the bank, reasonable debt to income ratios, and a strong ability to honor their mortgage commitments. Today's consumers may remember the days of easy money from not so long ago, and may not understand that lending practices and standards have changed so much. Conversely, some may be very aware of those changes, and are afraid to face the scrutiny. As former President Roosevelt once said:
"So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself -- nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance"
So, if you are a serious home buyer, you need to face that fear and take the first step in the process-- get pre-approved. Deal with a local lender, once whose reputation for service, knowledge and integrity is unquestioned, and determine where you stand in the process. Many consumers, including myself, have bruised credit. Taking that first step and diagnosing what ails you (credit-wise) will allow you to proactively work to improve your credit standing. If your credit is solid, your financing will be an easy and painless process. If your credit needs work, then start now to rebuild it. Fear isn't going to change your situation; only facing fear will do that.
I met a buyer prospect a couple of months ago, and she was interested Traverse City homes for sale. She kind of danced around the issue of financing, implying that her mother would either co-sign on a mortgage, or take one out herself. When I asked if her mother had gotten pre-approved, she got rather indignant. I told her, honestly and respectfully, that she had to have her financing in order before we went looking. Bank-owned homes are in high demand, and the sellers won't even consider an offer to purchase unless it is accompanied by a pre-approval letter. She was appalled that I asked her to have her financing in order, and exasperatedly asked " So you only show properties to pre-approved buyers??" Yes! It's in your best interests (and mine, too) for you to be pre-approved. It givces you the security of knowing that you can purchase a home, and it gives you a definite price range in which to look. And in these turbulent times, sellers face great risks too, so demonstrating you are capable of performing eases their worries and strengthens your bargaining power.
So, delay not in getting your financing secured. It's more important than you may realize. If you are thinking of purchasing a home in the Greater Traverse City area, please consider visiting my website at http://ChuckGollay.com, where you can search all the listings, request financing assistance, and have access to a dedicated and caring residential real estate professional.