Although many believe that spring comes in like a lion and goes out like a lamb, D.C. housing market professionals see it through the eyes of another animal: that ever-quick rabbit. The 2014 spring market will wait for no one and the rules of engagement have changed. So now is the time to arm yourself with real estate professionals and mortgage bankers who will help you formulate a strategy that’s sure to get your contract ratified.
With low inventory and the highest demand seen in years, it is more important than ever to get your file fully underwritten, not simply pre-approved before you put an offer on a property. What does “fully underwritten” exactly mean? How can you achieve that? Ask your mortgage professional to not just take your application but also collect all of your income and asset data upfront. By doing so, they will be able to fully underwrite your borrowing credentials, and issue a “loan commitment,” instead of the more common “preapproval letter,” which says little to guarantee a borrower’s ability to be approved.
In a market where desirable properties are getting multiple offers, having a full loan commitment is vital because it shows that your offer has rock solid financing. When sellers review multiple offers, they will almost always accept the contract that looks most likely to close without issue. As a buyer with a “loan commitment” all you’re waiting for is the address, because the rest is already in the bag. With a loan commitment, you’ll be able to hop right into the front of the race and get your offer accepted, because sellers LOVE buyers who will get to closing quickly, just like a spring rabbit.
What exactly will you need to submit to be issued a “loan commitment?” The requirements will vary depending on the specifics of the loan you’re seeking. Ranging from conventional loans with sizeable down payments, to programs like D.C. Open Doors, which enables buyers to substantially reduce their down payment requirement, there are a host of options your mortgage banker can help you navigate. In general you’ll want to be prepared to submit two year’s worthy of tax returns and W2s, as well as two months of bank statements and your last two paystubs. It’s also a good practice to start to keep your statements and paystubs in a folder, so when you speak with a mortgage banker, most of what you’ll need is already on hand. It may seem like a lot of busy work, and you’ll feel like our friend the spring bunny, hopping around looking for forage, but these documents will have to be submitted eventually anyway, so it pays to have them ready to go.
Another worthwhile step is to pool any funds you intend to put toward a home into a single account, and minimize how much you transfer money within your accounts in the months leading up to your home purchase. The more you move your money, the more extensive your paperwork will be and the more difficult it will be to document it all. Additionally, your mortgage banker will pull your credit and help you identify any issues that may be problematic. This gives you time to rectify small issues and assure you are able to secure the best terms possible once you have a ratified contact. So be like the wise owl, plan ahead and get your finances in order early.
In today’s market, buyers are jumping on scarce listings faster than a bunny leaps through a carrot field. The spring housing market is like a sprint fit for a rabbit. Having your mortgage professional run your income, credit and asset data by his/her underwriter will signify to the sellers you mean business and will race like the hare to win their home. Having a mortgage professional who’s willing to take these simple steps for you, goes a long way to make sure your dream home becomes a reality.
Francki DiFrancesco is the top producer for Apex Home Loans. She has more than 17 years of experience in the mortgage industry and has originated more than $65 million in loans annually. Reach her at 240-268-3141 or firstname.lastname@example.org.