If you aren’t going through a foreclosure yourself, then you might feel like the mortgage crisis doesn’t have a whole lot to do with you. But, there are some interesting changes to lending practices that can impact you when you’re looking to purchase or sell a property. Today I got the latest scoop on what’s going on in the mortgage industry and how it will impact you as a buyer or seller in the current market.
1 – Your Credit Score matters, not only to your mortgage company, but to your mortgage insurance company. If your credit is score is too low, the mortgage insurance company will not want to insure the loan, even if your mortgage company is willing to lend it to you. In addition, your score can have an impact on both your closing costs and your monthly payments. So one of the best things you can do in preparing to buy a home, is to work on improving your credit score.
2 – Offer a Fair Price for your home. Lenders are being stringent on appraisal values, because they now recognize that if they lend more than a property is worth, and then need to foreclose, they will never recoup the full loan amount. When you make an offer, make sure your real estate agent shows you accurate comparable sales that are near the property and in similar condition. If your offer price is higher than the appraisal, the seller may not want to reduce their price, which leaves you without a mortgage and without the house.
3 – Allow Enough Time to get to settlement. A variety of issues can arise from the time of the appraisal to the time of the mortgage commitment. Often, the appraisal is not ordered until after the inspection issues have been resolved, leaving only a short time for the loan process. A settlement date set for 5 weeks from the date of the signed agreement should be sufficient.
As a seller, what’s important to the buyer’s mortgage is important to you. If the buyer is unable to obtain the mortgage, then you are still left with the property. This means keeping your price and time frame realistic with today’s market. You will also want your real estate agent to ensure that the buyer is working with a reputable lender, that their financial information appears to support their ability to purchase the property at the agreed price, and that an actual mortgage commitment is obtained by the date agreed upon.
A knowledgeable real estate professional should be able to help you navigate the pitfalls of the current mortgage climate to ensure a successful real estate transaction.