The information and expertise found in this blog article was provided and sponsored by our Affiliate Partner, First Federal Mortgage.
Homebuyers in 2022 face unique challenges including low inventory with high demand, increasing interest rates, and a rapid-fire market. Preparation can help minimize these challenges, but where do you start? The best starting point is building a team made up of two crucial professionals. Finding the right experts is a saving grace for homebuyers in today’s market.
1. Find a mortgage lender (unless you are paying cash).
Your lender is extremely important. Their expertise will help you know how much home you can afford. Adding a lender who is familiar with your market and has a favorable reputation among local industry professionals to your team will only enhance this step in your home buying journey. A good lender should also provide you with the following services and information.
Good Communication and Availability
Your lender will review your financial information and discuss with you all the possibilities available for financing. It is important that you have open communication with your lender and know the best way(s) to contact them if you have further questions. Keeping you and others informed throughout the mortgage process is critical; ask your lender if they have an automated system for updates.
A Variety of Lending Programs
Having numerous programs will allow flexibility with meeting your financial needs. “Every borrower has their own DNA; therefore, mortgage lending cannot be one-size-fits-all,” said Clara Cannon, Branch Manager of First Federal Mortgage in Mobile, AL.
Take time to discuss and review all possibilities with your lender. You need to know and understand your financial capabilities, how much cash will you need for down payment and closing cost, and the acceptable sources for your loan type. The loans you should discuss with your lender are listed below.
Conventional (non-government)
FHA, VA, and USDA (government programs)
Down Payment Assistance Programs
Bridge Loans (used to advance equity from sale of present home to avoid the sale of present home contingency)
In-house portfolio loans
A Pre-qualification Letter
Most agents require this letter before they will begin showing you properties. You will need to provide the lender with the following documentation to validate your financial position:
Copy of Photo ID – a valid driver’s license or state ID or passport
Past two year’s W-2s
Most recent pay stubs reflecting one month’s income
Past two month’s bank statements – include all pages
Previous two month’s stocks, bonds, and investment accounts
Verification of any additional income or assets – such as alimony or child support, retirement, etc.
If self-employed, provide the past 2 years’ Federal Tax Returns with all schedules, K1s, etc.
Make sure you get a pre-qualified “all options available,” as some sellers will only accept offers with conventional financing.
2. Find a REALTOR®
It is best to have a professional who is familiar with the market and understands the challenges of limited inventory, multiply offers and rising prices. By working with a REALTOR®, a member of the National Association of REALTORS®, you are gaining an expert with your best interest in mind. REALTORS® abide by the REALTOR® Code of Ethics and are supported by their local association with industry-relevant education, resources, and tools.
Good communication and negotiating skills will be critical should you find yourself in a bidding war with other homebuyers. Discuss with your agent ways to make your offer more attractable, perhaps limiting contingencies and being flexible with occupancy dates. Your agent may also suggest you add an escalation clause.
Teamwork makes the Dream (Home) Work.
Limited inventory means it will take teamwork to find your home. Being patient, well-prepared and working with a team of professionals will help you overcome challenges and maneuver the complexities of today’s market. The search for your dynamic duo can begin today on BaldwinREALTORS.com through our Find a REALTOR® and Find an Affiliate (for mortgage lenders like First Federal Mortgage) search engines.