You’re pre-approved! Now, go buy a house, but don’t do it alone!

You’ve sought the knowledge and professionalism of a mortgage originator to get pre-approved for a mortgage.  You now know what the current rate is, you know how much you need for a down payment and closing costs, and you’ve got a letter in your hand that says you can buy a house for $XXX,XXX.  Now you’re ready to go “house shopping.”  But you’re not working with a realtor.  WHY NOT?!!

Many home buyers, especially first time buyers, don’t realize that the seller of a home pays the realtor’s commission.  That means that if realtor Joe Smith has a house listed with a 6% sales commission, he is willing to split that commission with any realtor that brings a buyer to the home.  So if you’re working with realtor Mary Jones, she brings you to Joe’s listing and you buy it, Joe splits the commission with Mary.  Mary will assist you with negotiating the price, filling out the proper forms, recommending an inspector, and most importantly, Mary knows the laws necessary to make sure you are legally protected as a home buyer.  Joe does know them as well, but Joe’s responsibility and first obligation is to his seller, so while you may think it’s ok to just call the agent whose name is on the sign in front of a house, you still want someone working on your behalf and yours alone.

If it turns out you don’t like the house that Joe has listed, you can have Mary do a search on the MLS for the specifics of a house you have in mind and in your price range.  If you want three bedrooms, two bathrooms, fireplace, swimming pool, finished basement, etc., Mary can look that up in the MLS and get you a list of houses that meet your wants and needs.  You may think that you can do that yourself with the internet, but if a house goes on the market today, it may not hit the internet for a day or two.  In the meantime, another buyer who is working with a realtor will get to see it before you and might beat you out on the home of your dreams.

Summing up, you wouldn’t try to get your mortgage without seeking the help of a qualified professional, don’t do it when you’re ready to buy your home.  The service is literally free and priceless!

Are today's guidelines tighter?

There are some who would argue that today's mortgage guidelines are too tight to allow the average person to buy a home.  Are they?  When compared to the guidelines of 2006, one could argue that to be the case, while others would use the rebuttal that the guidelines of 2006 were too loose.  Either way, there’s no denying that houses are selling.  From time to time, I like to pass on this statistic and the slide below shows that, in fact, homes are selling and at an average of 12,466 per day across the country, according to the National Association of Realtors (NAR).  And of those, just under 9000 were buyers who obtained a mortgage.  That’s and average of  nearly 9000 people getting a mortgage every day in this country.

Yes, it is not as easy as it once was to purchase a home, but there should be some level of work involved in accomplishing the American Dream.  Having good credit vs. marginal credit, having a down payment vs. no money down, proving you have a job vs. fogging a mirror, etc.  This is the old “skin in the game” theory.

The real estate market is such that the environment is creating an opportunity for first time home buyers to realize home ownership at a lesser monthly payment than renting.  With today’s prices and interest rates, the monthly payment on a mortgage can be less expensive than a rental.  Take into account the tax write off and you’ve got an even better scenario.  Surveys being done by experts are proving that the opportunity is now.

In any event, if you're considering a purchase in the near future and haven't spoken with a mortgage expert, it's never too early to do that.  It's also a great way to test them.  If you let them know you are looking to buy somewhere down the road and they don't give you the time of day because you're not buying now, that's a good indication of the service you'd get down the road.  I hear that all the time.  "You're the first person who would talk to us about this."  You also want accurate information about the process.  I can't tell you how many times I've heard someone say "My uncle told me I should do this" or "My cousin told me it was supposed to be this way."  Mortgage guidelines have changed a lot over the last couple of years and probably since your uncle or cousin went through the process.  Get the facts now and maybe even see what your credit report looks like.  You may need to "tidy up" in that department before being able to buy.  An educated consumer is the best defense against those "tighter guidelines."

Trying to catch the market at the bottom can get you bitten in the same place

Often, I hear potential home buyers commenting on how they’re waiting for the market to bottom out before buying a home.  But what is the indicator that the market has bottomed out?  Truth be told, you don’t know until it’s already happened.  So do you roll the dice and hope you catch it at the very bottom, or do you find something you like, get a comfortable price, payment, and interest rate now and not sweat the fact that if you had waited, you could have save $12 a month on your payment?

The fact of the matter is, no one knows when the market will, has, or did bottom out.  We know that prices are at record lows, as is mortgage rates.   Waiting for the market to “bottom out” has been a process that has bitten more people in their bottom than afforded them the opportunity to get a better deal.  So many things can happen in that time that you’re waiting.  Rates could go up.  The market could turn around.  The house you had your eye on could get scooped up by another buyer.  And the list goes on and on.

The phrase “There’s never been a better time to purchase a home” has been used over and over for the past year or more.  There’s a reason for that.  Rates are very low and have remained steady for at least a year.  Prices are stable and actually already negotiable, so why wait for that?  Even if you were to luck out and get a slightly better deal on rate or price, is it really worth the risk of losing out on your dream home?  I’ve seen the fail too many times.  So if you’re in the market to purchase a home, whether it be your first home, a move up home, or you’re downsizing, get off the fence and pull the trigger.  In the long run, you will be glad you did.