Even if you are pre-approved, an unexpected change in your credit status (such as a job change) could affect your ability to get financing. Or the home itself might not appraise for the value necessary to get the loan. We will include a financing condition in the Offer to Purchase to protect you in this situation, so you are not obligated to complete the sale if the mortgage is not approved. However, in a hot real estate market you can expect to compete with multiple offers and you can put yourself in a good position by making a clean offer without too many conditions. Getting pre-approved, being sure you’ve cleaned up any credit problems, having the cash for your down payment on hand, avoiding job changes, and not making any major purchases will allow you to go forward with more confidence.
With a copy of the signed Offer to Purchase and the necessary financial information, we’ll submit your application to the mortgage lender. The lender will qualify the application and complete a valuation on the property you want to purchase. Mortgage insurance gives you the ability to buy a home with a down payment of less than 20% of the purchase price.
There may be times when, as part of your offer, you request the seller carry back a second mortgage to help facilitate your purchase of their home. In cases when the seller does not need all of the proceeds from the sale to purchase their next house, this is an option. The advantage to the buyer is that by combining your down payment and second mortgage from the seller, you may be able to avoid paying mortgage insurance and save yourself some money. The terms and conditions of any seller financing should be fully set out in the contract.