show me the money, honey!
In our local East Bay real estate market - one VERY important first step is lining up your financing!
Prospective buyers will frequently comment that they have excellent credit scores and getting a loan is “ No problem!”
This is great news!
However, in our local East Bay real estate market a very important first step is to have your financing pretty much wrapped and ready to go before you start looking at houses.
Our market is fast moving and competitive. When you see a property you are interested in, which could be sooner or later, you want to know it is one you can afford. You also want to be able to make an offer with no financing strings attached, knowing that your lender will finance your purchase.
Most experienced agents will not work with buyers until they have their financing underway. We don’t want to waste any ones time looking at properties that don’t make sense for your budget! During COVID where all homes are shown by appointment, it keeps everyone safer if home showings are limited to qualified buyers….. and sellers may also require proof of funds before granting buyers access to their home.
If you are considering a cash purchase, or a cash purchase with a refinance and cash out after the purchase it’s a very good idea to speak with both your tax advisor, possibly a financial consultant as well as a lender in advance of purchasing a property. There are steps to take upfront so you can execute this after the close.
A number of buyers in our market are in the fortunate position of having relatives who can help! Gift funds and family loans may all require some advance planning.
Ideally your lender will FULLY UNDERWRITE your file for the maximum amount they will lend you. You can then consider what costs make sense for you and adjust your purchase price range down as needed.
It can take some time especially for the larger banks to increase your limit if you find you need to spend more to get what you want….. you can always choose to spend less than the bank will actually lend you!
It is very unfortunate when a buyer does not have their financing plan fully lined up, and they either cannot make an offer, or jeopardize their offer because the financing has not been fully thought out.
There are numerous types of loans and lenders and many have niche products for different buyer scenarios and different types of property.
It is often a good idea to speak with at least 3 lenders and hear what they have to say. Don’t just shop for the rate!
There is more involved in securing financing and getting into contract and a successful close than shopping the best rate.
If you cannot get into contract or close due to the financing the rate is immaterial!
I am always happy to recommend good local lenders who you can speak with and decide who is the best fit for you.
As always, I’m happy to be a resource for those considering a move and to offer advice in the current environment!
- Jackie
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