In addition to being the title of a catchy Abba tune, “Money Money Money” is what you should be thinking about when you are shopping for your new home. 

Time and again home buyers neglect to get pre-approved for a mortgage and find that they either couldn’t qualify for a certain amount of money, or during the time it took for them to get qualified for a mortgage, the home ended up going to another buyer. 

Let all of us at REALESTATE-SANTAMONICA.COM prevent that from happening to you!  We have a number of mortgage brokers we work with that are great…for commercial lending as well as residential.   

Currently rates are good…and down payments are low again, so today just may be the day you should give us a call to help you find your dream home.

 

Some quick insights on navigating the mortgage lanscape

So you’re ready to go House Hunting…you have a Santa Monica Realtor, you have your down payment, and you’ve put on your favorite walking shoes…now what?  Well first of all, congratulations!  Today is a wonderful time to buy real estate.  It’s truly a buyers’ market, so now more than at any time in the past decade, your dollar will really stretch nice and far.  That’s the good news. 

The challenging news is that because of a little sub-prime mortgage drama, obtaining a home loan now lies somewhere between “difficult” and “giving up your first child.”  But rest at ease…lenders don’t really want your kids.  ;)  And all of us at SANTAMONICA-REALESTATE.COM are here to help you.  We have three great useful tips designed to not only help you get your loan, but also to make sure your offer looks as good as possible, so that you’ll soon be reading articles like this, in the home of your dreams!

TOP THREE THINGS YOU NEED TO DO

1.  GET PRE-APPROVED 

The first item of business is to get pre-approved!  Pre-approval is basically finding out how much house you can afford, and how you’re going to afford it.  Time and again home buyers set their sites on a dream house only to find out they either can’t afford the home, or the home gets sold to another buyer who was pre-approved and could therefore move faster into escrow.

To get pre-approved, first pick a reputable mortgage lender.  If you don’t have one, ask!  At REALESTATE-SANTAMONICA.COM, we have a number of lenders we trust…we’re happy to point you in the right direction.

Now that you have a mortgage lender, you have the person who is going to help make your home owning dream a reality.  This person is almost as important as the Realtor.  So give him or her all your financial information: how much money you earn, how much is in the bank, how much you owe, etc.

The mortgage lender will run your credit history, so all of this information will come up anyway, but it’s always nice to just be upfront with your lender during the initial conversation, so that he/she can begin helping you right from the start!  You will soon know how much you can comfortably spend on a home…and you’re that much closer to going on your first House Hunt!

2.  GO FULL-DOC

The next item of business is to ask your mortgage lender to pre-approve you with full financial documentation.  In the real estate business, we call this “Full Doc.”

Before the sub-prime mortgage situation, many mortgages were given to home buyers based simply on their credit score (this is called your FICO score) along with their earnings statement (your W-2 tax form).  These loan approvals are commonly known as “stated income” loans.

Many of the homes going into default now are owned by buyers who were “stated income” and banks are understandably wary about approving loans this way.

To make sure you get your loan, and your perfect house, we are recommending that you go “Full Doc.”  This process takes a little longer than just simply getting you pre-approved with your income, credit history and debt.  Going full-doc actually requires the mortgage lender to go through your tax history for the past two years to determine your true actual income.

Why go “Full Doc”?  When you start writing offers on homes, the listing agent and the seller will want the home to go to the most qualified buyer.  They will not want the home falling out of escrow because the buyer really couldn’t get financing based on his/her pay stubs.

Time and again I’ve seen listing agents and sellers go with offers that were for less money, but were from “Full Doc” buyers.  So go the extra mile…it may save you money when you buy your house!

3.  PROOF OF FUNDS

We’ve saved the easiest tip for last…show “Proof of Funds.”  In short, “proof of funds” is showing both the listing agent and the seller that you truly have the money on hand that is necessary for the down payment and the closing costs.

Because many loans now require more of a down payment than loans of the recent past, it’s becoming more and more important to show that the buyer has available cash.

This “proof of funds” can be anything from a bank statement to a retirement account.  It’s just anywhere from which you can draw the liquid cash available to complete the transaction.

To many experienced home buyers reading this article, this tip can seem really like a “so what” type of thing.  But the truth is, in today’s challenging real estate market, anything you (the buyer) can provide the seller to show that your offer is serious, and that you really have the money, will separate you and your offer from all the others.

And as I mentioned before, I have seen many offers that were for less money get accepted because the offer included full documentation, and proof of funds will only help strengthen your offer.

So remember, now more than ever offers are being accepted from buyers who may not necessarily have the highest offer, but from buyers who can close the deal!

Happy Hunting, and remember that REALESTATE-SANTAMONICA.COM is just a click a way.  Please contact us with any questions and to take advantage of our network of professionals in the mortgage business.