3 Reasons to get Pre-qualified

After staying home for a while, you have decided now is a great time to buy a home with a pool, a bigger office or extra bedroom. You have noticed that interest rates are low and new homes are coming on the market. Open houses are beginning to show up in the newspaper and you are ready to take a look. 

Open houses are easy! You walk in, have a friendly conversation with the REALTOR®, take a look around, and move on to the next one. After a few open houses, you see a wonderful house that meets all your criteria. You want to make an offer. You tell the REALTOR® that is showing the home that you want to make an offer. They are thrilled to help you, after all, that is why they are holding the home open. The very first question they ask you is; “Are you pre-qualified with a lender?”. If your answer is “No”, they put you in touch with a lender they know and you are off and running. In a few hours or days, you will be ready to make that offer. Great! In the meantime, a pre-qualified buyer walks in and makes an offer that gets presented immediately. The offer is acceptable to the seller and they accept the offer. You never had a shot because you were not prequalified.

1. The first reason to get pre-qualified before you look at homes is so that you are ready to make an offer when you see the home you want. Right now, homes are selling very quickly and if you are not ready to make an offer, you will lose out. The current Arizona contract states that a pre-qualification letter must accompany the offer along with ‘proof of funds’ to close the transaction. Even if you are paying cash, you have to provide proof that you have the money located somewhere besides your mattress. A picture of the money does not count.

2. You want to be pre-qualified so that you know how much you qualify for, the approximate costs you will be paying on a monthly basis, the rate you are going to pay, and what the lender is charging you. The lowest interest rate doesn’t always translate into the lowest payment. Look at the written Loan Estimate provided by the lender. This will tell you what you are paying overtime. Sometimes the low-interest rate is tied to a lot of upfront charges or extra fees added to the loan. The Loan Estimate sheet will walk you through all the charges connected to the loan. Review this document very carefully.

Also, once you have an accepted offer on the house of your dreams, it is hard to change lenders and keep the offer on track.

You can also lock in a low-interest rate. Interest rates are a lot like the stock market, they move up and down all the time. When times are volatile, the rates can change hourly. We have seen this happen a lot recently and the one thing that is for sure, if you don’t lock your rate in if the rates go up, you will have less buying power. A 1 point change can lower what you qualify for by $100,000. Right now, rates are good 

3. A pre-qualification will let you know what buying power you have, the types of loans you can get, and how much you are going to pay on a monthly basis. You may qualify for a loan that has a higher payment than you want to make. The loan officer can adjust your loan amount to fit the payment that you are comfortable with. There is a variety of loans on the market, so you want the loan that best fits you and keeps you comfortable. 

Currently, our inventory is low and we have very few homes to choose from. Even though our inventory is low, there are more listings coming on the market and they are selling fast. As a buyer, you want to be ready to make an offer when you see your next home, so get pre-qualified!

BIO

Joan Wilson is an active REALTOR® with Long Realty in Sierra Vista and Cochise County. She is a member of the Huachuca 50 board, past President of Women’s Council of REALTORS®, and current President of the Southeast Arizona Association of REALTORS®. 

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5 Steps to Buying a Home

Now is a great time to buy a home. Interest rates are low and there are more houses coming on the market. The housing market is still moving very fast in spite of the Coronavirus, so as a buyer, you need to be ready to make an offer when you see the home you want.

Here are 5 things you need to do so that you are ready to buy your next home.

1. Talk to a lender and get pre-approved. Getting pre-approved will let you and your REALTOR® know what homes you can afford. While we still have low-interest rates, you can afford more of a home. As interest rates rise (and they are rising), you can afford less of a home. 1 point (1%) can make a difference in what you can afford by as much as $100,000. Try to lock in a good rate right now. That will give you a few weeks to find the home you want without worrying about the rates going up. 

There are all types of great loans out there. In this area, we do a lot of VA loans and right now the rates are excellent. You can also get great conventional loans with as little as 5% down. Of course, rates are always better the higher your credit score is, that is why you need to talk to a lender first.

You do not want to be spending anything out of the ordinary once you start looking for a home. Nor do you want the money that you had in your mattress to suddenly show up in your account. Money needs to be in your accounts at least 30 days prior to using it to buy a house. Talk with your lender about this. 

2. Find a REALTOR® that knows the market and the area that you are interested in living in. REALTORS® can help you with information on homes, neighborhoods and the home buying process. Their negotiating skills, knowledge of services you will need and familiarity with the area can be invaluable in the home buying process. 

Be honest with your REALTOR®. Let them know what you are looking for in a house, in a neighborhood, and in a loan payment. You may qualify for more than you want to spend on a home. Let your REALTOR® know so they get you to the right house. REALTORS® know or can find out a lot of things about neighborhoods that you will want to know. They also have access to local disclosures and can help you get your kids into the school district that you want.

3. Start looking for your next home. It always helps to know what features you must have and what features you would be nice to have. Share this with your REALTOR®. REALTORS® look at houses every day, where you may only be able to go once a week or only on weekends. They may see the perfect house for you while they are looking at houses and right now houses are moving fast enough that you may want to set up a special showing with your REALTOR®. Also, send your REALTOR® houses you see online that you like. Even if you can’t go see it immediately, they can help with this process.

4. Write an offer. Once you find the right house, you and your REALTOR® can determine the approximate value of the home and write an offer. This is where your REALTOR’S® negotiating skills come in. The best offer is an offer that is written well, has all the right documentation, and has a reasonable chance of getting accepted.

Once you have an accepted offer, the fun begins. Work with your REALTOR® to be sure you comply with all the timelines that the lender, homeowner, and contract require. They will help you get any required inspections as well as any additional inspections you may want. They can help you stay on top of and understand all the paperwork that is coming your way.

5. Now you are ready to close the sale and move into your home. Be sure to get insurance in place, get the utilities in your name, and keep your identification handy since you will need it when you meet with the escrow company to sign documents. Usually, the lender will send the paperwork for the loan to the escrow officer, where you will sign the paperwork and in a few days the home will be yours. Be sure to have your furniture delivered a day or two after closing, just in case the lender takes extra time.

Over the next few weeks, we can not predict the housing market due to the Coronavirus. Houses are still selling very quickly, buyers are still buying, and sellers are still listing their homes for sale. A the end of February we had 326 houses on the market. As of March 20th, we only have 313 houses on the market. In February 124 homes closed, and 61 have already closed by the middle of March with 260 pending, so it still appears to be a very active market.

If you would like more in-depth information about your local market, talk with your local residential REALTOR ®. They will be happy to help you get your home ready. Make sure that they have the REALTOR® trademark next to their name to ensure that you are working with the best of the best.

BIO

Joan Wilson is an active REALTOR® with Long Realty in Sierra Vista and Cochise County. She is a member of the Huachuca 50 board, past President of Women’s Council of REALTORS®, and current President of the Southeast Arizona Association of REALTORS®.