Pinetop White Mountain Blog

Good Afternoon Everyone,

I know it has been a while since I posted any gems of wisdom but it seems my creative juices had kind of taken a break. 

My topic today has to do with Buyers who want to buy but don't truly understand what it takes to buy a property.  I know you hear a lot about what a great time to buy this is and there is a lot of truth to that statement.  However, there are also some hard realities that go along with that.

To start with a desire to buy and the ability to do it are really two different things.  Today's lending climate is very tight.  The banks have been burned so badly by the down turn in the economy and their own poor lending practices of the past, that lending criteria has gone from way too lenient to way too tight.  All loans are being scrutinized very closely, and to be honest, it almost seems like lenders are looking for excuses not to lend rather than to help people buy property. 

The numerous changes that Washington has made to try and correct the errors of the past have actually resulted in some unintended consequences.  People that should be qualified to buy are being disqualified over things that they could fix if they were only given a chance.  Loans are being rejected outright before they ever get in front of an underwriter because the Loan Officer who took the loan application made a mistake in arithmetic.

Appraisal regulations have added to the difficulty because appraisers no longer have much control over value.  They are being forced in to little black boxes that they cannot work out of.  They have no flexibility and they can do little to adjust value to a conventional sale if the only other sales in the neighborhood are foreclosures. 

Another hard reality for buyers is that if you want to buy you need to have decent credit or a good deal of cash.  If you hope to acquire a government backed loan like an FHA Loan or perhaps a USDA Loan, you will need some cash up front and the closing costs and they are usually significant on a Government backed loan. 

On a conventional loan you need excellent credit and at least 20% down that you can verify having on deposit for at least 90 days prior to your date of application with the lender.  You will likely be asked to provide proof of those funds when you present an offer.  Banks who own properties really want to know you have the money to buy and you will need a cashiers check for your earnest money and you will have to show proof of funds to close when you present your offer. 

There are some possibilities for alternative financing such as a Seller Carry back.  As easy as that sounds however, most sellers are actually more particular about the buyer's ability to pay than most banks.  You are still going to need proof of funds to close, proof of employment, and probably a credit report before a seller is going to agree to carry a note for you.  After all if you default, they are going to have to foreclose on you the same as a bank would and that process is not inexpensive. 

The main thing to remember is that if you want to buy, you need to be prepared to jump through hoops to get there. You also need someone in your court who knows how to negotiate those hoops.  An experienced REALTOR® is your best asset when it is time to purchase your next property.  They know the market and they can help you negotiate the waters in today's challenging Real Estate market.

Have a great rest of the week, until next time.....

Sandra Paulow, Associate Broker, GRI, SFR (928) 242-0300