Don’t be naughty to your preapproval status over the holidays

iStock_000004639657XSmall[1]If you are currently preappoved for a mortgage to buy a home or are considering getting a mortgage in the New Year, what you do now with regards to your credit and income may impact your preapproval status.

A mortgage preapproval is based on information provided at the time of the pre-application. It is only valid assuming that the information provided at that time has not changed. You may not be aware that you’ve done something that may have jeopardized your preapproval until a month or two later when you’re getting ready to make an offer on a home and then learn you’ve been Scrooged.

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Seattle Real Estate Chat [Video] on Preapproval and Commitment Letters

In this episode, Jim Reppond and I discuss Commitment Letters.  A commitment letter is kind of like a preapproval letter on steroids. And in this hot sellers market that the greater Seattle area is currently experiencing – many buyers can use a little extra help to stand out from a similar competing offer.  A Loan Commitment Letter may be the extra boost that could help some home buyers.

Check out our last episode!

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Steps in the Mortgage Process

iStock_000003709509SmallThe process of getting a mortgage consists of several stages and typically takes anywhere from 20 – 40 days (or more) depending on how prepared you are, what mortgage program you have selected and if it’s a purchase, the closing date may dictate how long the process will take. The steps below may not take place in the exact order I have listed and some steps may happen simultaneously.

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Protect your Preapproval Status over the Holidays

santawalletTis the Season for holiday shopping. The aggressive sales push this year started BEFORE Thanksgiving with more mega-stores even remaining open on a day when employees should have had the day off (or at least had working on Thanksgiving as being “optional”).Cyber Monday is now cyber week…anyhow, my point is, stores are competing for your dollars. If you are considering buying a home or are currently pre-approved to buy a home, I thought I’d share some tips for you on how to make sure your “pre-approved” status is not jeopardized during the holiday season.

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How to Leverage your Lender when Making an Offer [Video] #SeattleREchat

In our most recent Seattle Real Estate Chat, Jim Reppond and I discuss how to leverage our lender when making an offer.

Tune in for our next Seattle Real Estate Chat on Tuesday, 10:00 am Seattle time where we talk about lenders or agents who wear two hats – such as agents who represent both the buyer and seller (dual agency) or an agent who’s also the loan originator.

Seattle Real Estate Chat is a weekly show that Jim Reppond and I host on a Google/YouTube – join us!  We are also on Twitter @SeattleREchat or search #SeattleREchat.

 

Updating your Preapproval Letter

j0403639_2I’m often asked by home buyers “does my preapproval letter expire” or “what happens if we don’t find a home in a few months”. Preapproval letters should include two dates: when the letter was prepared and when the preapproval expires.  Fear not, most of the time, it should just take providing a couple documents to your loan officer so they can “dust off” your application and provide an updated pre-approval letter.

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What is the difference between a Preapproval Letter and a Loan Commitment Letter?

j0403639_2Last week I shared how it’s pretty much mandatory that if you are a home buyer making an offer on a home located in the greater Seattle area, you better be equipped with a strong preapproval letter from a reputable lender.

Some home buyers are taking this a step further and requesting a Loan Commitment Letter from their lender. What’s the difference?

There are actually three levels of qualifications that a potential home buyer may have after contacting a lender. Please keep in mind that not all lenders may have the same standards or definitions as what I’m posting here.

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Is it necessary in Seattle to get preapproved to make an offer on a home?

Recently one of my out of state clients who is looking to buy an investment home in Seattle asked “Is it necessary in Seattle to get preapproved?”

The short answer: YES!  Unless you’re paying cash! And if you are paying cash, be prepared to show the listing agent and seller that you have proof of funds.

Redfin’s “Bidding War Report” reveals Seattle is the 5th most competitive housing markets in the nation with 74.6% of offers “facing competition” (multiple offers) last month.

With Seattle area home sellers having more than just one offer from potential home buyers to choose from, you must be preapproved by a reputable local lender. Listing agents will help the seller review the offers to determine which one is the best for their situation.

According to the Bidding War Report, if you’re buying a home in Seattle, you may want to consider getting your home inspection done BEFORE making your offer (aka a “pre-inspection”). Last month, 14.3% of “winning offers” on Seattle homes had pre-inspections and 19% waived their inspection contingency.

Pre-Inspect-to-Play: This 2-bedroom, 1-bath home in Seattle’s Phinney Ridge neighborhood had 300 showings, 19 pre-inspections (a competitive strategy common in Seattle in which the buyer has the home inspected before submitting an offer so that they can safely waive the inspection contingency), and more than 30 offers….

What did the “winning offers” have for financing in Seattle last month? 

  • 63.1% used conventional financing
  • 4.8% used FHA or VA financing
  • 2.4% paid cash

10.7% of “winning offers” waived their financing contingency.  17.9% of “winning offers” included a cover letter, or a “love letter” to the seller about why they want to buy their home.

This is great news for home owners who have been contemplating selling their home. Last night, King 5 aired this story about a couple from Seattle who sold their home in a matter of days for more than they expected with several strong offers to choose from. 

Rising home prices will also help home owners who have been waiting for their home values to go up so they can refinance (if they don’t already qualify for HARP or a FHA/VA streamline refi). 

ATTENTION HOME BUYERS is the greater Seattle area: you’ve got to get your game on if you want to “win” in a multiple offer situation! Be sure to get preapproved from a local trusted lender. Your preapproval letter needs to be strong enough to give the seller and listing agent confidence that you are the most qualified buyer with the highest odds of having the transaction close quickly and without issues. Here’s a list of what you’ll need in order to be truly preapproved…if you’re working with a lender who has not requested these items, you’re probably just prequalifed and there is a HUGE difference.  

If you are considering buying or refinancing a home located in Seattle or anywhere in Washington state, where I’m licensed, I am happy to help you! I have been helping home buyers with their mortgage needs at Mortgage Master Service Corporation for 13 years. Click here for a rate quote or contact me to start the preapproval process.