Most have not seen a sellers’ revolution in the housing industry such as what mid-Michigan is experiencing. Inventory is at a record low, and buyers are finding themselves in multiple-offer battles.
The best advice for potential buyers is to be approved with a reputable lender and have a backup plan. Be prepared to pay at least asking price if not a few thousand more. The concept of a sellers’ market is a rude awakening to most buyers, who over the last 10 years have become used to getting seller concessions to help pay their closing costs or negotiate a lower-than-asking-price offer.
More than ever, potential buyers need to be prepared months ahead of time. This requires being preapproved with a lender and putting an offer in immediately after the showing of a home. Real estate agents will not show buyers homes without a preapproval letter in hand informing them of the buyer’s maximum purchase price and loan program.
Being preapproved can be a quick and easy process. The first step is pulling credit reports. Do not rely on free sites, such as Credit Karma, to give accurate scores. Mortgage lenders require a tri-merge credit report directly from the three credit bureaus: Equifax, Experian and TransUnion. The middle score of the bureaus is then used for qualification purposes.
All loan programs have minimum credit score requirements. Even though most lenders will go down to a 620 middle score, this doesn’t guarantee an approval. The Department of Housing and Urban Development now looks at a two-year credit report history to determine if the borrower has demonstrated the ability to pay creditors on time. By obtaining the two-year history early enough, the lender can prepare a credit repair plan that will increase the chances of preapproval for a borrower with a low credit score. A high credit score means a lower interest rate and eligibility for multiple loan programs.
This is the first and most basic step to make the home-buying experience less intimidating: Find a mortgage lender whom you feel comfortable with and who will take the time to educate you throughout the lending process. The mortgage guidelines are endless and are constantly changing. Having a knowledgeable and qualified lender is the most important aspect in completing a smooth transaction from start to finish.
Learn more by calling 810-732-9660. Cason Home Loans is located at G3404 Miller Road, Flint.