How Financing Can Make or Break a Sale Simon Kafati FirstBank Assistant Vice President, Mortgage & Consumer Lending
Six Things to Consider to Ensure Money Doesn’t Get in the Way of Your Next Closing
Buying a home is a complicated process for everyone involved, including real estate agents and brokers who know what’s going on. From the perspective of the homebuyer, especially those making their first forays into homeownership, it can be a whirlwind of confusion and frustration. Compound that with the negative economic impacts from COVID-19, and you’ve added uncertainty to the equation.
period of time? Talk through these questions, so a buyer can truly wrap their head around the magnitude of their purchase. KEEP CREDITS IN CHECK It seems like this goes without saying, but low interest rates can be enticing for other large purchases that need financing. Make sure buyers know to avoid opening any new credit lines, increasing the balances on credit cards or other loans, or drawing from savings accounts that will be utilized for down payments and closing costs. This could lead to a delay in closing, or worse, cause a buyer to no longer qualify for a loan.
It’s safe to assume most folks perusing the market understand the risk, or are financially stable enough, to be making such a significant purchase at this time. But it doesn’t hurt to reiterate the importance of finding the right home, with the right loan, from the right lender, for a given budget. As an agent, don’t neglect the financing part of the home-buying process. Here are some things to consider on your next deal, which may lead to a speedy and smooth closing:
LOW RATE ENVIRONMENT Speaking of interest rates, be prepared to explain why rates are low, and why they won’t stay low. It should not come as a surprise that a majority of prospective buyers are not interest-rate savvy, only understanding that: low rates = a good time to buy. For those who can secure funding at this time, that assumption may be true. But if the economy worsens, returns on savings could be diminished, credit card limits could shrink, and the market as a whole may take more time to recover. These aren’t make or break points for every prospective buyer, but always things to consider.
KNOW THE PRICE RANGE Getting pre-qualified for a mortgage will help someone understand the ceiling on their price range. However, that can be misleading, potentially getting an individual in over their head. It is equally important to understand whether the monthly payment on a new home is not only feasible for your buyer, but comfortable. Consider presenting the following questions: Is it more or less than your current housing payment? Can you make the new payment without impacting your lifestyle and budget? Assuming a household’s income is never a guarantee, is there a safety blanket to maintain payments for a
AFFORDABLE HOUSING PROGRAMS The previous point may encourage some homebuyers, but know that programs are available to ease financial burdens for those who could use it. There are a slew of
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