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.

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:

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 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.

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.

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

Affordable Housing Programs available that can be used payments, tax and insurance payments- and how they to buy a new home or refinance existing mortgages. They affect their price range. are designed for people with low-to-moderate incomes, based on a percentage of the average income in their GO ABOVE AND BEYOND community. Nonprofits, local Housing Authorities, and Even with relaxed guidelines, social distancing is just even financial institutions, including about the only certainty for the imFirstBank, offer competitive terms for mediate future. This means would-be borrowers earning low-to-moderate homebuyers are leaning more on incomes. Outside of FirstBank’s own technology, opposed to the tried program, it partners with a handful Instead of just being the and true showing. Instead of just of organizations that provide down broker between buyers being the broker between buyers payment assistance. FirstBank has and sellers, this is an and sellers, this is an opportunity to established an exclusive program with Impact Development Fund, helping opportunity to be the be the eyes, ears and brains of the operation. Acquaint yourselves with qualified low-to-moderate income boreyes, ears and brains of various neighborhoods and types of rowers by providing up to 20 percent of the operation. properties. Utilize the tools available the purchase price or $30,000 (whichevto buyers, like watching Realtor.com er is less) in down payment assistance. alerts and market-specific resources, Additional affordable housing prolisted. grams, from low interest loans to grants, are out there and ready to be taken advantage of. Know what products are Be a trusted resource on a variety of things, most notably available in your market because their requirements may the home’s resale value, neighborhood, if the size matches fit more buyers than usual in this recent downturn. the buyer’s needs, and all around expertise from experiCOMMUNICATION IS KEY wrong home, is a great way to market Encourage buyers to have thorough conversations with yourself as a trusted agent and potheir lenders about what documentation will be needed tentially secure future business. throughout the mortgage process. It’s always best to be prepared early on, which can help them get organized. Talk about interest rates, homeowners association (HOA) to stay on top of homes as they are ence. Talking someone into the right home, or out of the