News and Real Estate Trends For Coconut Grove & Coral Gables Luxury Real Estate

Need A Loan To Own? Approval Process Has Its Challenges October 25th, 2013

seller Buyer Tips

Mortgage Money Cheap for Creditworthy Buyers

Unless you’ve been living under a clump of seaweed for a while, then you’re likely aware that home and condo sales in Miami are at an all-time high resulting in low inventories, and often times, buyers competing for the same property–better known as a “bidding war”, so typical of a market clash between supply and demand.  While this describes today’s cycle of the buying market in many neighborhoods, it won’t take long for  you to realize that buying and negotiating a piece of paradise in Miami is more favorable to the Seller and not that of a qualified buyer–even those negotiating an ‘all  cash’ deal.  The property can have many buyers making an offer, however, the Seller obviously  has to decide buyer to sell the property to.

So, first things first.  If you hope to purchase a property, educate yourself about being a buyer in today’s market, and prepare yourself to have ‘the edge’ (and I don’t mean you’ll need the edge to jump off of while going through the process), but rather when it comes time to make an offer–you’ll want to be best prepared to make an offer you hope the Seller will accept, especially since there’s a good chance of competing offers from other buyers–all at the same time!  Also, there’s a good chance that one or more of the competing offers will be ‘all cash’ and you will be clueless about the number of buyers competing with you to purchase the property.

As a buyer, you should understand current mortgage requirements and home buying trends as they relate to today’s real estate market and how to obtain a mortgage, really.  And, by the way, those previous (now laughable) mortgage terms from long ago such as making an offer subject to the sale of your current home, Seller financing, assuming the current owner’s mortgage, and how about this one: getting approved for a mortgage?  Tried this one lately?

If you are contemplating the mortgage process for the first time, or even for the first time in a long time, there are some things to learn about just how worthless you may be–in the eyes of the bank and just how much less value there is according to the bank’s appraiser for your property of choice–especially when your contract price is compared to appraiser’s opinion of value. In many instances, properties are not appraising for whatever reason, and when this happens, the lender will be asking you to “show them a lot more money” or else have yourself a nice life maintaining your current living arrangement in your meager rental or extending your lifestyle living in the bedroom of your childhood home.

The best way to prevent this from happening is to work closely with an experienced, local mortgage broker and real estate agent to be certain the most recent sales in the area make sense of both prices:  the list price and the contract price on the purchase and sales contract and that you have agreed to pay a price consistent with what the most recent sales in the neighborhood, rather than what the Seller thinks the property is worth.   This is so important and so simple to determine–all with the help of the professionals.  Be careful  not to figure out the value of a property on your own by researching the various real estate websites on the internet–they cannot not be totally relied upon for determining true make value.

Now if you have a chunk of cash in the bank that has been set aside for the purchase of a property to cover a sizable down payment and closing costs, with home prices  being what they are in today’s market, it will ,in most instances, not be nearly enough to be a cash buyer like most hard-working, respectable people who need a mortgage to buy a home.  By enlisting invaluable help of a mortgage broker, you will be guided through the process with a better chance of someday arriving at a closing table with enough cash to actually close.  In addition to understanding what the closing costs will be (estimated costs), you will need to gather information the lender will require of you for the mortgage process in order to evaluate your credit history.  Needing a mortgage to purchase a property requires good planning, savings, a high credit score, a long and ‘on time’ payment history, job stability, etc., in order to be best prepared to obtain a mortgage.

Before you start to seriously look at properties, it is imperative that you enlist the help of a professional real estate agent who can assist with finding the right mortgage broker to get you will guide you from start to finish with a purchase you are proud of.

Working with a local mortgage broker is just as important as having an experienced real estate professional to assist you in focusing on properties based on what the mortgage broker reveals about your ability to qualify and the price range in which you should be shopping for a home.  When doing so, your real estate professional will select and show you properties tailored to your needs while keeping you in your price range.

In this strong seller market, you should be making good, solid offers–not low ball offers which are construed as insulting and a waste of time for everyone. Remember, this is not a Buyers market and Sellers are in the driver’s seat and will likely get their price and terms rather quickly from another buyer if not from you.  Also, in an active market such as this one while hoping to take advantage of low interest mortgage rates, many Buyers are swooning the home-buying arena just as you are with hopes of making home ownership a reality during this buying opportunity when money is cheap, however, this still may not get you a seat at the closing table.  The mortgage loan process is certain to include what may seem like never-ending requests for past, present and future proof of your credit worthiness, years of tax returns, bank statements, employment records, pay stubs, letters of explanation as to how or why you spent your money by means of a credit account for just about anything.

If you make it through the application process and are lucky enough to actually get approved for a mortgage, you will begin to see the light of a closing day ahead of you, and this is very exciting!  But there’s more . . . another obstacle may be looming–so it’s a good time to start praying–praying that the appraiser for the bank is from the same county as the dream home you hope to soon own.  And although mortgage money is cheap, this doesn’t necessarily guarantee you a seat at the closing table, but when you get there, you will be glad you did what it took to get there and almost always possible when working with top professionals who can help you along the way.  Whew!

If you would like more information or recommendations on “how to” do anything real estate related including finding a mortgage lender, please feel free to call me at 305.281.8100 or send me an email at [email protected].