When it comes to money, no one likes surprises.
In the current market, buyers must bring their best and most competitive offers. But that is not all there is to it. Paying attention to a few other important details could give you just the edge you need over your competition.
Let’s take a look at 5 things you can do to give yourself every possible advantage as you prepare to buy your dream home.
1. A Mortgage Preapproval That Sticks
If you have ever been pitched the idea of a 60-second mortgage approval, you probably appreciate that some things are just too good to be true.
While these quick preapprovals can offer some reassurance by giving you an idea of your approximate budget, they are usually not worth much when it comes to an actual offer to purchase.
If you plan to rely on one of these speedy preapprovals to support your offer to purchase, you may want to exercise caution. If your lender has not asked you to provide supporting documentation like a Notice of Assessment, proof of income, paystubs and so on, chances are good this type of preapproval won’t hold up when you need it to.
Consider taking the extra time to go through a formal mortgage preapproval with your lender. It may take a few days, or perhaps even several days, to secure this. However, in the end you will want a preapproval that is solid enough to get you all the way through to your mortgage commitment.
2. Time to Confirm the Mortgage Commitment
Find out in advance how much time your lender needs to confirm financing. This will then determine how much time you ask for in a financing condition in your offer.
Once a buyer has placed an offer on a home and the seller has accepted it, the next step is to confirm with the lender that they are prepared to fund that specific property.
This is the natural progression of a real estate transaction. A buyer will first confirm that a lender is prepared to offer a mortgage in a predetermined amount – this is the preapproval. After that, the lender must verify that they agree to use those mortgage funds to finance that specific address.
Depending on your lender, it may take one day or several to secure the mortgage commitment. Investigating the actual timeline with your specific lender will put you in on solid footing when the time comes to make an offer.
3. Understand Your Payments
It’s not uncommon for a lender to approve a spending limit that is higher than you would like. However, sometimes the only way to know if this applies to you is to use a mortgage calculator and look at what the monthly or bi-weekly payments will be.
During the mortgage preapproval process, your lender will tell you that you are approved to purchase a home up to a certain threshold, let’s say $500,000.
But in doing the math, you realize that the payments at this level are outside your comfort zone. You determine that based on the payments, you would be more comfortable purchasing a home at $450,000.
It’s important to take a moment to do the math for yourself after you receive your mortgage preapproval. Once you know what your actual payments will be, you can proceed with your house shopping.
Having done your research, the shopping will now be based on a budget you have determined for yourself rather than one that was decided by your lender.
4. Learn About Offer Dates
With the real estate market moving at such a rapid pace, it is becoming common for sellers to use an offer date to stimulate a sense of urgency and try to generate multiple offers.
An offer date is simply a date chosen on the calendar where the seller has agreed to receive offers on the home.
Learning about any offer dates on the homes you want to see can help you avoid a situation where you visit a property only to find out that offers are being reviewed immediately afterwards.
Ensure there are at least a few days between when you view the home and any potential offer date. This will give you time to digest the visit and decide if you want to proceed with a purchase.
5. Ensure Your Deposit is Ready
Determine how accessible your deposit money is. This is important, because it’s likely you will need to provide the deposit within 24 hours of making the offer.
If your financing is tied up in investments, it may take a few days to get your hands on the deposit funds – and market conditions may not allow for the extra time needed.
Ensure you can access your deposit funds quickly, if needed, so you can back up your offer to purchase and be that much closer to a firm deal.***
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