Visiting Open Houses? You Need to Be Fully Preapproved

It’s fun to visit open houses on the weekends. You may be picturing yourself living in the home, enjoying the backyard or perhaps making a few home improvements to really make it “yours”.

If you’re even thinking about buying a home, I strongly encourage you to get fully preapproved before you find yourself at an open house wanting to present an offer.

Here are some steps I recommend for anyone considering buying a home.

  1. Remove your contact info from trigger lists. The credit bureaus re-sale your information to strange lenders once your credit is pulled. It’s a disgusting practice that they’re making bucks off of your personal data. You should have the option to submit yourself to this practice instead of having your personal information sold. You can remove yourself from trigger list – it’s not hard to do and well worth protecting your privacy.
  2. Contact a mortgage professional to answer any preliminary questions (you may find some answers on my blog – if not, let me know – I just might write a post to answer your questions!). The mortgage professional can help prequalify you without running your credit or obtaining your financial records. They should be able to provide you with a rough idea of what you qualify for as far as payment and down payment while addressing your home ownership goals. This can also help you decide if you want to proceed with this person to help you become preapproved.
  3. Get Preapproved! Getting preapproved is the next step and I recommend that you go a step further and make sure that you’re actually pre-underwritten. This means that an actual underwriter has reviewed your application, supporting documents and has issued an approval (subject to the property). Even though I have been helping people with buying homes and loan approvals for over twenty years, I still take the next step by having an underwriter issue an approval. Not only does this help your loan close faster; it also makes your offer on your next home stronger when the seller and listing agent know your loan has the underwriter’s approval.
  4. Select your real estate professional to represent YOU as the BUYER. In my opinion, you are in a better position when you work with a buyers agent BEFORE you start visiting open houses. Listing Agents represent the seller and it’s their number one job to sell the home and to lookout for the seller’s best interest. If you utilize the listing agent to represent you as well or to submit your offer, you may be putting yourself at a disadvantage as they represent the seller first. If you wind up with any issues with financing, employment or perhaps you ‘d like the seller to contribute towards repairs or closing costs; you’ll be in a worst position than if you have a different real estate professional represent you as a buyers agent. I happy to offer recommendations. 🙂 PS: I also think it’s important that your mortgage professional is not acting as your real estate agent (and vice versa).

Once you’re preapproved and actively looking for your next home, it’s important to keep your mortgage professional informed. I like to provide updated scenarios for my clients with current mortgage rates (mortgage rates change constantly) and the home’s property taxes. In the event of a possible bidding war, I can review different price points for the home with my clients.

In a highly competitive market, like we have been experiencing due to the lack of inventory, a “cash buyer program” may be worth considering. This allows buyers essentially make a cash offer on a home. It’s similar to having a rich relative buy the home for you and then you buy the home back from the relative after closing. Recently the National Association of Realtors reported that over 30% of offers on homes are “cash offers”. Sellers tend to prefer cash offers as it removes the financing contingency and allows for a very fast closing.

Of course, if you are considering buying a home, whether it’s your first home, move-up home, vacation property, investment or transitional home, I am honored to work with you!

Home Improvement and Construction Loans

There are many options available for financing home improvements not to mention using cash or available funds.

What type of program is used may depend on the scope and amount of funds needed for the project. We can help you with everything from a home equity line of credit where you can do the work yourself or a full construction loan if you’re working with a vacant lot or a complete tear-down property. Larger projects may require a general contractor and/or to have the contractor approved by the lender.

Loans that do not require a general contractor are our home equity line of credit, stand-alone second mortgage or a cash-out refi. With the home equity loan of credit or second mortgage, you could keep your existing first mortgage (if there is one).

Here are some possible programs to consider:

Home Equity Line of Credit/Second Mortgage:

  • Home equity line of credit with a variable rate for a specific loan amount that can be drawn on and repaid over time. There are varying terms for the repayment. Second mortgages have a fixed rate/payment for a specific amount of time.
  • Funds from a home equity loan are available to use for just about anything you want.

Cash-Out Refinance

  • Loan to value limited to 80% of appraised value and maximum conforming loan limits.
  • Funds from the cash-out refi are available for any use.
  • More streamlined of a process than the renovation loan (below).

Conventional Renovation Loan:

  • Maximum loan to value is 97% for owner occupied; 90% for second homes and 85% for investment property-purchase or 75% if the investment property is a refinance.
  • Conforming loan limits: $977,500 for King, Pierce and Snohomish County (single family dwelling). NOTE: JUMBO Renovation Loans are available too!
  • 2-4 unit homes available (different loan to values apply) for owner occupied, primary residences only.
  • 1 unit investment property allowed with max LTV of 85%.
  • ADU/DADU’s are permitted for owner occupied, primary residences.
  • Licensed contractors and/or subcontractors must be used where licensing is required per state or local regulations for the specific trade or type of renovation that is being completed.
  • Often used for remodel projects and luxury items may be included. Cannot be used for a complete teardown however, One-Time-Close can facilitate this.
  • Allows access to upfront equity based on the after improved value of the home.

One-Time-Close Construction Loan:

  • This is a true construction loan that would for a new build of a primary residence from the lot up. A person can already own the land or this can be combined with purchasing the land.
  • Conforming/FHA loan limits: $977,500 for King, Pierce and Snohomish County. VA Loans available. (Jumbo program also available).
  • Eligible property types include 1-unit site-built homes, modular, multi-wide manufactured homes, pre-hab. ADU/DADU permitted WHEN it’s part of a 1-unit site-built home.
  • Primary residences and second homes (conventional financing).
  • Builder must be approved.
  • Interest-only payments during construction phase (up to 12 months) which then modifies to a 30-year fixed mortgage.

We also have FHA 203(K) and VA Renovation Loans available.

You don’t have to have perfect credit to take advantage of these programs to either make your existing home your dream home or if you’re looking at buying a home could use some improvement.

If you would like to review possible scenarios for your home, please reach out to me!

Mortgage Market Update for the Week of February 26, 2024

Curious about what may impact mortgage rates this week? Check out my latest video!

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Check out my latest video to see what may impact the direction of mortgage interest rates this week.

If you’re considering buying a home, remodeling or refinancing, please contact me!

What’s the Difference Between being Pre-Qualified or Pre-Approved for a Mortgage?

Do you know the difference between being prequalified or preapproved for a mortgage? This short video reviews the importance of being preapproved.

If you are currently preapproved with a lender, I recommend making sure that your preapproval has been underwritten by a “human underwriter” and not just “AUS” (automatic underwriting i.e. a computer).  One way to make sure you have been fully underwritten is to ask your mortgage professional for the underwriter’s name…if they say “Fannie Mae” or “Freddie Mac” – that’s actually the automated underwriting system that lenders use. 😉

Being fully pre-underwritten not only helps to provide you with peace of mind with your loan approval, it also helps to expedite your closing AND may also help your offer be accepted over other offers with a weaker approval status.

If you have any questions or if I can be of any assistance, please reach out to me!

Mortgage Market Update for the week of February 5, 2024

Mortgage rates have been “bouncing” around a bit. Check out more on my quick video below.

If you’re considering a mortgage, please reach out to me – I’m happy to help you!