.png)
The Ultimate Guide to Choosing the Right Mortgage Broker for Your Home Loan
Choosing the right mortgage broker for your home loan
4 min
The general rule of thumb when buying any home is to get pre-approved. It’s just basic home buying etiquette. If you go to a nice restaurant, wouldn’t you put the cloth napkin over your lap before getting ready to eat?
Getting pre-approved before house hunting is just like that—in the end, it’ll save you from making a big mess further down the road.
Remember that getting pre-approved doesn’t mean you’ve committed to anything—this isn’t a promise ring. Rate Leaf’s pre-approval process is simply a quick way to see how much home buying power you have. We measure this by looking at your debt to income ratio, your savings, FICO score, and other factors.
Once you’ve been pre-approved, you can start house hunting with a knowledgeable real estate agent who’s local to the area.
Sometimes, people undervalue their real estate agents. The truth is, they’re like the 007 of housing. They’re charismatic, know top secret information about listings that aren’t available to the public, and will negotiate on your behalf so that your home buying offer is taken seriously.
Buying a home at a short sale that’s in pre-foreclosure might sound like a walk in the park, but you need to remember that these homes were taken from or at risk of being taken from their owners.
While banks are often eager to sell these homes for cheaper in order to make back some of the money they’ve lost—you still need to be careful. Let’s say, for example, that a home is being prepared for auction. A pre-foreclosure attorney can help you negotiate your case in court so that auction day is pushed back.
It’s important to push back auction day or get to an owner before a home goes to auction. Auctions are a pain because they're extremely competitive. You’ll be going in blind and bidding higher and higher on a home that you could’ve bought for much less.
Normally, there are several investors present at auctions, and you can bet that they’ll outbid you. If not, you still run the risk of paying much more than you should for a home in pre-foreclosure.
Quite frankly, unless you’re an investor with a lot of buying power, I’d avoid going to auctions altogether.
Lastly, make sure you get the pre-foreclosed home inspected. You really never know all the ins and outs of a home until you’re holding the inspection report in your hand.
If there are any issues with the home, you want to know before you settle on a final offer. Remember why the home was reclaimed by the bank in the first place: the homeowner couldn’t afford their mortgage.
If the homeowner couldn’t afford their mortgage, who knows if they were able to keep up with maintenance?
Some people have the wrong idea about the recession we entered in 2020. The pandemic spooked investors and caused stocks to tumble for a couple of months. But you need to remember, the housing market accounts for about 20% of the US economy. It’s been our strong housing market that has steadily been driving economic recovery—so don’t think that there are nearly as many foreclosed homes available as in 2008.
In fact, many homeowners only entered forbearance because they were worried about all of the unknowns that the pandemic brought to their lives. People weren’t sure if they would lose work or get sick, and that caused an uptick in forbearance programs.
According to Housing Wire, in March 2020, 4.3 million homeowners went into forbearance. Now, that number has shrunk to 2.7 million. While we’re not fully out of the woods yet, there’s more homeowners will be able to get out of forbearance.
What I’m trying to say is that what happened in 2008 was a once in a lifetime ordeal—the likes of which I hope we never have to see again.
While there are homes that are in pre-foreclosure, there’ll be much less than in the past—and with the housing market being such a driving economic force—that’s a good thing.
.webp)
