Written by Tom Tomasian
We are officially one week into the autumn season, pumpkin spice everything. Although, based on the recent high temps, I’m not quite ready to pull the air conditioner out of my window just yet. Most native New Englanders know that our weather can shift at the drop of a hat. To survive the fluctuations of our ever-changing seasons, you just have to always be prepared. The same can be said for the fall real estate market that is now upon us.
Many of potential buyers take their foot of the gas toward the end of the summer. We have recently been witnessing a white-hot real estate market in Boston and the surrounding areas. With the inventory shortage and bidding wars that have been going on, several would be home-owners have decided to take a timeout. According to Laura Erickson of Keller Williams, this is occurrence is often known as ‘buyer fatigue’. However, there is a light at the end of the tunnel. While the South Boston market is still as hot as ever, other areas are seeing some changes that could lure buyers back in. Laura has noted that foot traffic is down at open houses, and there are fewer bids on properties compared to the multiple offers over the last several months. She also points out the increasing number of price drops that have been seen on Massachusetts Multiple Listing Service. (MLS) It is important to understand that we are not at the top of the market yet, but we are seeing more opportunities for buyers to get involved again, and that is promising.
Before you call your realtor to get back out there, you need to ensure you’re in the best position to make a strong offer. Most pre-approval letters have an expiration date and it is crucial to have this updated ASAP. Updating a preapproval letter is a fairly easy process. The majority of your income and asset documentation needs to be refreshed. This usually means we need your most recent pay stubs, bank statements, and other items as well. Now is also the time to have a conversation with your loan officer if anything has changed in your situation. These factors could be a new job, a pay increase, or anything that could affect your ability to qualify for a new home loan.
You may also want to revisit your loan options to ensure you have the most up to date knowledge on your purchase power. There have been some industry changes with guidelines and there are also new loan products available today. Fannie Mae increased the debt-to-income (DTI) ratios in July from 45% to 50%. This change could potentially open the doors for many buyers to make higher offers with the increased purchasing power. It may also allow millennials, who typically carry more debt, to participate in the current market.
At Fairway Independent Mortgage Corporation, we have a new loan product that has the potential to strengthen your offer to give you the competitive advantage over other buyers. We have recently rolled out a “TBD Commitment” program that allows the file be underwritten prior to property being identified. This TBD approval is subject to appraisal and a fully executed Purchase and Sale (P&S) contract, as well as all final conditions being satisfied by the borrower. The program is not available on all purchases, but may be a game changer for those who qualify. This program can potentially allow you to close much faster than the traditional mortgage process. This strengthens your offer in many ways. You may now be able to compete with cash offers, whose lure is often a quick close. You will also be a stronger buyer against others who have multiple contingencies on their offers. In this market, you need every completive advantage you can get to ensure an accepted offer.
With the arrival of the fall season, we are entering a new market. Prices will most likely continue to rise, but there have been recent encouraging signs for new buyers who are resuming their home search. For a more complete real estate analysis, please reach out to Lauran Erickson at firstname.lastname@example.org. Now that you are ready to get back out there, you must know your loan options and update your pre-approval letter. Remember, knowledge plus action is power! I am more than happy to guide you through the mortgage process. If you are committed to buying a new home this year or just want some general information, you can reach me at 617-866-9900 or email me at email@example.com. The market still has its challenges, but with the proper steps taken ahead of time, you will always be prepared for success. ☺
Head to www.massmortgagepro.com for more information!