With mortgage rates near historic lows and rent still on the rise, we’re likely to see an influx of homebuyers this spring. Home inventory, on the other hand, has been lagging and brewing conditions for a competitive homebuying market.
Acting quickly on making an offer and hiring a great real estate agent are essential in a competitive housing market, but you also need to have all your ducks in a row with your home financing. Here’s how to obtain financing with the power of a cash offer.
What’s a Loan Commitment?
Meeting with a mortgage banker should always be your first step when you decide to purchase a home, regardless of it being your first purchase or tenth. A pre-approval is the traditional route taken by homebuyers but a loan commitment takes the pre-approval process a few steps further.
After your lender runs your credit score and compiles a loan application with the information you provide regarding income, assets, employment, etc. you will be asked to provide supporting documents, including tax returns, pay stubs, W-2's and bank statements.
Once all of the information in your loan application is verified with those supporting documents, your lender can issue a loan commitment (even prior to finding a home to purchase).
Here are three reasons why you should get a loan commitment this spring.
Presenting the Best Offer on a Property
With home inventory falling short, multiple-offer scenarios are becoming commonplace. A loan commitment gives you cash-offer power because your home financing is sound and secure.
Peace of Mind
A loan commitment is a reliable commitment from your lender stating the amount of money to be loaned, the interest rate you qualify for*, type of loan and period of time for which the commitment is good.
The process of buying a home and applying for a mortgage can be emotional, even stressful. Obtaining a loan commitment will give you peace of mind that your home financing is sound, even prior to finding a home to purchase.
While shopping for a home with a pre-approval is better than shopping without, a loan commitment gives you the ability to expedite the loan process, which also appeals to home sellers.
To learn more about obtaining a loan commitment, contact one of our mortgage bankers. For more information about the loan commitment versus pre-approval process, download our free Mortgage 101 Handbook.
* This is a qualified rate not a locked rate, they are subject to change based on the market at the time you find your home to purchase.