In an environment where most offers are made through FHA loans or VA loans there are significant steps to increase your chances by 60-70% of buying the home that you have your heart set on:
- Get a full underwriters pre-approval for your loan. Any mortgage broker can issue a pre-qualification letter. They are truly worthless. Bank Owned Properties are managed by asset managers and they take only the offers that they feel have the best chances of closing and closing fast. When you deal with a reputable mid-sized direct lender submitting a credit package to the underwriter is a very simple process. Once you have this approval your loan can close inside of 2 weeks.
- Go through this process so you know exactly how much home you can afford comfortably. My stomach turns when I hear borrowers asking “how much house can I afford?” The question that you need to prepared to ask is how much money can I pay every month for housing without affecting my current lifestyle.
- Once you are pre-approved you have a greater chance to eliminate any last minute surprises. You will know exactly how much money you need to bring to the table or ask for a concession from the seller(not recommended) so the closing can go smoothly and the transaction does not fall apart in the last minute.
- Once you start the process of the pre-approval you start to develop the relationships that will be on YOUR side through the process. The lender can recommend a Realtor or the Realtor can recommend the lender. Regardless of which one happens first, the Realtor should have the insight to have you pre-approved first.
- Most bank owned properties will require you that you get pre-qualified by the lender that foreclosed on the property. Don’t let anybody bully you into using their lender. Once you have an underwriter’s pre-approval you can prove your income and credit worthiness. Shop, shop and shop for the individuals that give you the highest degree of confidence in achieving your goals. Buying a home is a big investment driven by emotions. Once you see the house that looks like the dream home, you will do everything in your power to try to get it. This is not the best way to shop for your home. Talk with several Lenders and choose the one that YOU feel most comfortable with.
The great news is that the latest announcements by FHA and HUD regarding flipping properties will only accelerate the process of the cash investors running out of funds. THE GAME HAS CHANGED. DO NOT LOSE YOUR PATIENCE NOW. The credits for first time home buyers is still in effect and the rates are still at historical lows. Find a lender you trust and get an “full underwriter’s pre-approval”. If they refuse, call around or me and I will be happy to guide you in the right direction.
Michael Mekler is an active loan officer. Reach Michael via email at mmekler@fhaexpert.net or call toll-free to 1-888-218-0094
