Dear Friends,
I know that many of you have been in the market to purchase your first home for quite some time. Others know of at least a few people who have spent months trying to get their first home. It goes without saying that the West Michigan housing market has seen a surplus of buyers in relation to sellers over the past 2-3 years. So then, for those who have correctly taken the initial steps to get pre-approved, what should you do if you have had an extended hiatus in your home search?
How to Prepare,
Perhaps you’ve taken some time off during the winter months, and plan to get back into the market again this spring. How long is your pre-approval good for anyway? What should you be doing to prepare for financing if you were to find your perfect home this weekend? If you’ve taken some time off looking for homes during the winter months, but plan to get back into the market again soon, here are some questions that many first time home buyers should be asking.
Does my pre-approval need to be freshened up?
The answer to this important question depends on where you’re at, and/or where your lender is at as far as being on top of your pre-approval. Therefore, the answer to whether or not you need to freshen up your pre-approval at this time is discussed below as either:
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No
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Yes
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You may want a 2nd opinion from another lender.
**Please note that the answers to the questions are based on my 20 years of lending experience, and are based on my opinion. They may not be shared entirely by other loan officer’s, or the Realtor you have been working with.
Should you freshen up your pre-approval after an extended hiatus?
1. No (if):
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You have made an official pre-approval with a lender within the past 6-7 months.
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You have confidence in your lender that your lender can quickly update your outdated pre-approval when necessary.
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You are pretty confident that you will be seeking a specific loan type. For example, you know that you will be applying for a conventional 20% down loan, or you know that you will be applying for a VA Loan, or you are 95% sure that you will be financing with a USDA-RD Loan.
2. Yes (if):
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You are reasonably certain that you will be re-entering the housing market again in the near future you will want to update your documents with your lender.
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You are thinking about seeking a different type of financing than you were originally pre- approved for. For example, maybe you have saved more money, and now have the option of looking at Conventional financing in addition to the lower down programs, such as FHA, VA & MSHDA.
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You have a material change in credit, employment or income. For example, did you get a new loan since you were last pre-approved? Did your credit score drop? What about employment or income changes? Are you making more money now than when you were pre-approved, but has the pay structure changed from salary to commissions? These are all factors, among others, that can change the outcome of your pre-approval.
3. When to get a 2nd opinion from another lender: Here are some very important questions to ask yourself!
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Have you ever received an official Loan Estimate (“LE”) which itemizes the monthly payment, and break down of fees, escrows, and cash to close? If not, why? The “LE” is the official document used to display all of your loan terms, and it is required by Dodd/Frank to be disclosed by mortgage lenders for all official loan applications. The “LE” is truly is a consumer friendly form, and it was intended in part, to make it easier to comparison shop. To see examples of Loan Estimates that we provide for all of our pre-approvals, and required for all official applications per Dodd/Frank click here.
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Has your lender been accessible and gotten back to you when you need them? If it has been difficult to get responses back from your lender in the past 6 months, just wait until the spring market hits.
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Has your lender been available to you when you need them. When you and your Realtor are looking at homes, and need information on evenings and weekends, your lender should be available to give you all of the detailed information needed to assist you in making your decision on whether to write an offer, and how to structure your offer.
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Is your lender’s pre-approval letter credible in the local market. Don’t make the mistake of not realizing that some offers may be accepted over others based on how trusted the lender is to close the loan, and on time.
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Does your lender offer a variety of programs, ranging from a choice of: Conventional, FHA, VA, USDA-RD Loans, MSHDA Loans, and FHA 203K Rehab Loans.
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Is your lender mainly marketing how techy they are, and what great service they give, but then have higher rates and costs than normal? Or, are they mainly marketing how low their rates and costs might be, but the service they proves to be confusing, frustrating and lengthy? You really deserve to have the best of both worlds in low rates/costs and first rate service. One shouldn’t be sacrificed for another.
**Please note that these answers above are based on my 20 years of lending experience, and are based on my opinion. They may not be shared entirely by other loan officer’s, or the Realtor you have been working with.
