Mortgage Tips: Making Your Offer Look Solid as Cash

As recently as last spring, the Sarasota-Manatee metro area was ranked second in the nation for its large percentage of residential homes for sale paid for in cash.  But that trend—which at its peak involved two-thirds of all sales—has begun to ebb. By the second quarter of 2015, a 27% rise in local mortgage originations had propelled our region into the ranks of the top metros that have experienced the sharpest gains in transactions that use financing. Many of these originations were probably encouraged by the FHA’s lowering of the monthly mortgage insurance premium back in January; as well as by the expectation that today’s historically low interest rates will soon be a relic of the past once the Federal Reserve follows-through with its much-publicized plan to begin raising them again. That borrowing to buy property is on the upswing again should not be interpreted as a sign that less stringent lending standards have crept back into the system.  The strict regulatory environment that has defined mortgage lending in the aftermath of the Great Recession is still hanging tough; and the road to approval will be rocky for any would-be borrower who is less than completely forthcoming about his or her financial circumstances. The good news is that banks and other lenders truly want to lend you money.  That’s how they make theirs.  But it is also how they lose money should you fail to live up to the terms of the loan. As a result of hard lessons learned from the housing bubble, they now exercise an abundance of caution in checking—then double-checking—every borrower’s financial profile.  In other words, you must deal with the discovery process no matter how tedious or redundant it seems; or there will be no deal. Divulge all financial information. Indeed, one of the most common reasons why real estate transactions fall apart in today’s market is the simple failure of the borrower to fully divulge all financial information—no matter how big or small—that could impact on their ability to repay the loan.  As part of the approval process, you will be requested at various times to supply such documentation as bank and brokerage account statements, personal tax returns for at least the last two years, current paycheck stubs, recent W-2 forms; and a business balance sheet if you are self-employed. Make no major purchases until you have a commitment. Another common deal breaker that many borrowers unwittingly commit is making a major purchase—such as purchasing furniture for the new home—while the mortgage application is under review.  Emergencies happen, of course, when a sudden repair or a new appliance is urgently needed.  But you should alert your lender of such necessary expenses—preferably in advance—before you dip into your savings or whip out the plastic.    No loan is ever a done deal until the ink dries on the closing documents.  Thus, you could have the rug pulled out from under your mortgage commitment at almost any time by surprising the lender with a large ticket purchase. Be open and upfront. It also matters if you have outstanding liens for such things as alimony, child support or other official judgements.  While these are serious issues that must be resolved, it is far better to be open and up-front about them than attempting to conceal. Finding a property in today’s inventory-starved market is a challenge unto itself, especially with sellers often able to sort through multiple offers before deciding which to accept.  All things being equal, a strong commitment from your lender will help level the playing field and make your offer look as solid as cash. Get your property search off to the best possible start by having yourself pre-approved for a mortgage in advance.  The team of experienced professionals from MSC Mortgage is standing by to explain the process in detail, then help you get started.  Visit MSCMortgage.com to learn more.   Search Manatee, Charlotte, or Sarasota homes for sale on MichaelSaunders.com.