With such a positive and growth-oriented housing market as we have here in Kennewick, Pasco, Richland, West Richland and the surrounding areas, the pre-owned homes are moving well and new homes are being built to keep up with the demand. With all your “ducks in a row” prior to your househunting process, when you do find “the one you have to have”, the process will go more smoothly and expeditiously. The 2008 Tri-Cities residential real estate market has yet to get into full swing, but it’s not too early for aspiring buyers to get their financing strategies in order.
Lenders and real estate brokers say the confusion and contradictions of last year’s mortgage credit crunch have left many would-be buyers in a fog. They’re not sure who to approach for what kind of loan. They’re equally fuzzy on the new rules of the market. Industry insiders agree on some key tactics for nailing down reliable financing for the upcoming spring buying season:
* Find financing before you go househunting. Some of the institutional underpinnings of the mortgage market are still shifting, which can mean that a local lender might not have money available when you are ready to borrow.To avoid getting stuck at the closing table without a loan, introduce yourself to a couple of lenders that participate in the traditional Fannie Mae and Freddie Mac secondary lending systems. Knowing that your lender has a ready source of funds should give you confidence to negotiate knowing that your best offer will stick.
* Chase your paper. Low-documentation loans, especially those that rely mainly on the borrower’s word about income and assets, are almost completely gone. Find, organize and make copies of all the papers that prove what you make and how much money you have: W-2 forms for the past two years; savings and investment account statements for the past several quarters; and pay stubs for the past month.*Expect to put in equity. Down payments are back, though the requirements aren’t as stringent as the 10 percent to 20 percent demanded a decade ago. Expect to put down at least 5 percent. Employers programs, grants and other ways to piece together a down payment may be worth it, but apply now so that you can bring proof of that money to a lender before you go into full-bore househunting mode.
*Reconcile your expectation with your budget before you launch into a jammed schedule of open houses and house tours. Calculate what you can afford assuming a traditional fixed-rate, 30-year mortgage. In other words, gauge affordability based on the highest monthly payment you’d have to make – namely its standard monthly payment, which won’t change for the length of the loan (other than it’s property tax component) – and not on artificially low adjustable-rate teasers offered by the few aggressive lenders left in the market. Choose a fixed interest rate to give you a stable, predictable house payment. Those who choose the opposite in the past several years are largely the homeowners now scrambling to refinance, sell or stave off foreclosure in this slow housing market with sluggish appreciation.