From Pre-Approvals to Appraisals: A Mortgage Broker's Advice for Today's Sellers Market

by Lori Auerbach 11/18/2020

 

Julie and I recently sat down with David Garofalo of Guaranteed Rate Affinity to discuss how we can help buyers, sellers and real estate investors understand the nuances of today’s mortgage climate.

JULIE: Now, more than ever, Fairfield County is attracting buyers from all over the country but particularly New York Metro area. In fact, in my 25 years of real estate, the demand for privacy & space is higher than I have ever seen. Many of our sellers are looking to purchase their new home. What can you share to help buyers position themselves in the strongest way possible?

DAVID:  The first step is always to get pre-approved by a lender.  The earlier this is done, the better.  You want to make sure you have the time to fix any unforeseen issues or challenges that you may have.   A good lender will verify all of your income, assets and credit before issuing a “pre-approval”. This is different from a “pre-qualification” which does not verify your income and assets.      

 LORI: With the high demand and low inventory, we are finding many buyers are offering over asking price. This can be an issue because appraisal may come in lower. Do you have advice or options on how to handle such situations? 

DAVID:  This can sometimes be an issue if the prices are appreciating quickly.   There’s always a potential risk of a house not appraising but that doesn’t mean you still can’t buy it.   If the house comes in low, the buyer does have the option to pay the difference of the appraisal and the purchase price or borrow at a higher loan to value ratio.   My suggestion is for the borrower and Realtors to be prepared to rebuttal a low appraisal if they feel the value is there.  Most appraisers are very reasonable in taking the realtors data into consideration. 

JULIE: Do you have any unique loan opportunities for downsizers?

DAVID:  There are not any specific loans for people looking to downsize, but I often do suggest speaking with a financial advisor.   When they downsize, many people choose to buy their new home with the proceeds of the home they are downsizing from,  without taking out a mortgage.  This does sometimes make sense, but with mortgage rates right now under 3%, it's definitely worth looking into putting less money into the home purchase, leaving the chance to invest more money in another financial vehicle.   

LORI: Would you ever recommend refinancing prior to selling? Or taking out a home equity loan to do improvements?  

DAVID: This does sometimes make sense for certain situations.   Some borrowers will refinance prior to purchasing a new home to lower your payment or pay off debts. Other times a new loan could be used to take cash out and put toward a down payment. An equity line can accomplish this as well.  

JULIE: If you had one piece of advice to offer buyers or sellers, what would it be? 

DAVID:  Honestly to work with a professional team that works together. Deals fall apart due to lack of communications so having a network, like AIRE, All Inclusive Real Estate, where the buyer, the realtor, the insurance agent, the mortgage broker, and any home service providers are all communicating to create a seamless transaction is very beneficial.

 

 

About the Author
Author

Lori Auerbach

Hi, I'm Lori Auerbach and I'd love to assist you. Whether you're in the research phase at the beginning of your real estate search or you know exactly what you're looking for, you'll benefit from having a real estate professional by your side. I'd be honored to put my real estate experience to work for you.