Courtesy of Rob Spinosa, RPM Mortgage
Top 10 Things Buyers Can Do While Waiting for More Inventory
Years ago, when I had free time, I used to love watching Letterman. In fact, back then, he was on NBC and it used to be called “Late Night with David Letterman,” and not “The Late Show.” So that’s how farback we’re talking. Anyway, beginning in 1986, there was a Top 10 list every night. Often, by the time Dave got to Number 1, the audience would be rollicking in laughter.
Flash forward to winter/spring 2015, and for us on the buy side, both mortgage lenders and Realtors, there’s been very little that’s funny about the lack of inventory in many of our markets. This got me thinking about how we can productively use this trying down time to be best prepared when we see more properties list in the coming weeks. Here is something you may wish to share with your buyers:
10) Avoid changing jobs. This may sound obvious, but it still happens. Sometimes there’s no way to avoid it, but by all means, do not become newly self-employed. That is one of the toughest challenges for any lender to surmount.
9) Avoid large purchases. If you’ve been pre-approved for a loan already, adding debt may not hurt but it almost certainly won’t help.
8) Address known credit blemishes. But do it smartly, not blindly. Tinkering with credit is tricky so ask us first if what you plan to “fix” is helpful, harmful or needless.
7) File your 2014 taxes. Or your extension paperwork. But either way, get out of tax limbo. If you’re self-employed, have a current P&L ready to go as well.
6) Using gift funds? Some mortgage programs allow you to use gift funds, some don’t. If you plan to use a gift for some/all of your down payment, don’t spring this on your lender at the last minute. Let us know now if a gift is forthcoming and we may be able to advise on how or if it can be qualified.
5) Quiet all your down payment funds. Best practice is to take your down payment and closing costs and put them in a single account with little to no activity. So much the better if you can draw a wire from that account directly to escrow. If you can then produce two statements showing all your funds and no large deposits/withdrawals, your process will be infinitely easier.
4) Pay down your credit card balances. As long as you have the funds to do so. “Balance to limit” accounts for 30% of your overall FICO score. If your Visa card has a $10K limit, don’t run more than a $1000 balance at any time, for example. Less than 10% of the limit is ideal.
3) Keep your file current with your lender. Update your paystubs and bank statements on a monthly basis so that we don’t have to ask. We will love you for this.
2) Consult with, and trust, your real estate professional! Know what’s just listed, what’s sold and what your next offer strategy will be. Don’t go behind your agent’s back, and don’t get caught unprepared when a great house comes on. Eventually the right one will and it will go to the buyer with the most conviction and preparation (or cash…).
1) Stay positive. My overwhelming experience has been that everybody who stays with this game wins. It takes a great attitude and that’s up to you.
Get in touch with any questions on the above any time and good luck!
Rob Spinosa is a licensed mortgage professional in California (NMLS: 22343 and CA BRE: 01297944). He works for RPM Mortgage, a prominent, non-depository mortgage bank located in the San Francisco Bay Area. Rob’s been helping buyers and owners realize the dream of responsible home ownership since 1999 and has a “can do, will do” attitude to both business and life. Outside of the office, Rob is a competitive triathlete and has completed the prestigious Hawaii Ironman on multiple occasions. He can be reached at 877-270-5959 or rspinosa@rpm-mtg.com.