by Susan Lavery
Shop for Your Loan!
Why? You might be surprised. Depending upon how much you can put down (don’t forget to factor in a sizable chunk for closing costs as well as down payment), your credit rating, amount owed to other sources and income, a loan officer can quote you an interest rate and give you an estimate of how much you can afford and what your monthly payment will be. That way you can avoid disappointment and wasted time. If you already have a real estate agent and don’t know where to start, he or she probably has had enough experience with lenders to recommend some to contact.
Don’t be blindsided by your credit picture. The federal government mandates that each credit reporting agency (Transunion, Equifax, and Experian) give a free yearly credit report. You can apply for this at: www.annualcreditreport.com. Don’t be fooled by pay subscription sites with similar names, this one is the real deal for a free report with no obligation. Check your reports from each agency, because items on one site may not show up on another, and if you find any false information you can file online to have it corrected. This will greatly affect your loan-worthiness and can mean the difference between a loan or no loan, a high interest rate or a lower interest rate.
Research Your Area
Do you have school-age children? Then check out the local public schoolboard’s website for information about ratings and programs. Are you older? Then probably you’re interested in the convenience and availability of medical care. Check out local crime statistics, decide whether you want a community with a Homeowners Association or not and what restrictions you can and cannot live with. Do you want a single-family home, condo or townhome, and how much space do you need? Have a good idea of what you want and what price range you would like to stay within. Let your realtor search for homes that meet your needs and avoid wasting time and emotional energy on homes that do not.
Short Sale, Foreclosure, or “Regular” Sale?
Once upon a time, banks would let foreclosures go at a very good price because they did not want the expense and hassle of trying to market and maintain them. Those days are long-gone, as most larger lenders now have maintenance companies in larger areas and are having frequent BPO’s (broker price opinions) performed so they know exactly what their holdings are worth. If they do list it at a very low price, their intention may be to collect multiple offers and then pit the offerors against each other in a (barely legal) bidding war. The same with a short sale, where the seller/owner is attempting to get out from under a mortgage for less than he or she owes on the house. The seller may accept and sign on a low offer only to have the lender shoot it down 90 days later after receiving the BPO. Count on this process lasting for months and for saving no more than 10% over fair market value for a home that is going to be sold as-is and with potential maintenance/repair issues. Hands down, the (previously) normal type of sale is the easiest to negotiate and the most likely to sell for closest to list price and to close on time.
Ready to Make an Offer?
In Florida, you most likely will have to put an Earnest Money deposit in escrow (usually with a broker or title company) and have a copy of your loan pre-approval or pre-qualification in order for any offer to be accepted. The market is highly competitive and the best homes go very quickly – if you love it, others will too! So make sure you don’t lose out by not being ready when you find that keeper. Don’t be surprised if a home actually goes for HIGHER than list price – it happens more often than you think.