Buying A Home...See A Lender First
Posted by YVONNE HEFNER on Dec 1, 2002 - 10:15:00 AM
LOS ANGELES—For the month of November, in Canyon News territory, approximately 249 single family homes were listed for sale with approximately 127 homes sold. There were approximately 92 properties listed for lease and approximately 48 properties leased. According to the California Association of Realtors the median price of an existing, single family detached home in California rose to a new record during the third quarter of 2002, increasing 19.3 to $323,870. The median number of days it took to sell a single family home was 24 days in the third quarter of 2002 compared to 29 days for the same period a year ago. Historic records are a result of low mortgage interest rates, a growing population, minimal inventory, few places to build new housing and a low unemployment rate. California is also supported by numerous industries, a benefit not enjoyed by many other states. Housing activity is expected to remain strong through 2003 with 30-year fixed mortgage interest rates to rise slowly from current lows and to average only 6.5 percent in 2003. percent
Photo by Kibiwot Limo
If you have been thinking about purchasing a home or condominium but have put it off believing the process to be overwhelming rendering a Professor of Nuclear Science to intimidation, feel the credit report will deliver less than stellar data, or the piggy bank is not as full as you would like for a down payment, you may have delayed this exciting experience for no reason. As with most everything in life, you need a plan. Before driving up and down the hills, going to the open houses Sunday after Sunday, searching for the unobstructed view, deciding on whether you want the kids to attend Wonderland School, Carpenter, Roscomare or Buckley and calling to tell a real estate agent that you have found the most perfect home, speak with a financial person first. Many have had their hopes and dreams dashed to find that the 'perfect' home is beyond their financial reach, at least for now. Then there are those who happily discovered they can purchase more home than they thought. There is financing for nearly everyone. If you have great credit, have been employed for more than 2 years with the same employer and have very little cash for a down payment, there is financing available. If you have great credit, are self-employed but have a good amount of cash for a down payment, there is financing available. If you have a credit report that you would rather not show the world, have been employed steadily for some reasonable amount of time or at least can show or tell about a source of income and have cash for a substantial down payment, there is financing available. So, whom do you see for financing?
Most used are direct lenders (banks), mortgage companies and credit unions. Banks are general purpose lenders and are the second largest lenders for real estate in California. There is no great difference between real estate loans that a state bank makes and loans that the federal banks make. Interest rates and other loan terms are comparable to those offered by savings banks. Mortgage Bankers (Companies) usually loan their own money or roll it over so they can originate, finance and close first trust deeds or mortgages secured by real estate. They then sell the loans to institutional investors and service the loans through a contractual relation with the investors. A mortgage banker establishes a good line of credit with a bank to obtain available funds. Mortgage companies like to make loans that can be sold easily on the secondary mortgage market. In California, the brokerage function is one of the prime sources for loans on homes and income property. Mortgage companies usually have a pool of lenders with a varied lending criteria to meet the needs of persons with numerous situations. Credit Unions play a much smaller role in financing real estate. Most credit unions are incorporated and accumulate funds by selling shares to members. From this pool of funds, loans are made at an interest rate equal to or below the current market rate. This source of real estate funding is expected to grow and expand in coming years. Shop around, ask for referrals, compare interest rates to find the financing plan most suitable to your needs.
To be pre-qualified for a loan or to be pre-approved for a loan? Being pre-qualified for a loan is basically worthless. This letter provided to a potential borrower merely states that one is pre-qualified up to a stated amount of money based on information given the financial person. This letter does not guarantee the potential borrower will be financed. To be pre-approved means the financial person has received and reviewed documents including bank statements, credit report, tax statements and income statements. This letter will state the amount of money the potential borrower will be loaned subject to appraisal of the property to be purchased. All sellers accepting an offer want to be as certain as possible the escrow will close. When an escrow does not close, it is most often due to the buyer unable to obtain financing. For this reason, whereby sellers in the past readily accepted an offer accompanied with a pre-qual letter, sellers now prefer a pre-approved letter which receives priority. The seller knows the pre-approved buyer is guaranteed funding as long as the home appraises for not less than the offered purchase price. Being pre-approved and being pre-qualified can mean the difference between having an offer accepted and an offer rejected. Until next time, home matters.
Yvonne Hefner, a licensed Real Estate Agent, can be reached at 323-650-8812 or at email@example.com
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