It may not seem that way, but now is a great time to buy a house in the Northland.
Yes, temperatures are getting cold and winter is on the way. But that motivates home sellers. Why pay to heat and maintain an empty home all winter when they can get it sold?
Add to that one of the best environments for home lending favoring the buyer, with historically low rates, and you have a wonderful combination of factors lining up in favor of home purchasers.
But there’s one task all serious home buyers should have on their to-do lists if they want to benefit from this: Get prequalified for a mortgage loan.
When you hear banks talk about prequalification, it sometimes sounds like a pitch for business. Yes, we’re in the business of providing home loans. But that’s not why it’s important.
When you are prequalified, you have a firm understanding and confidence about how much you can spend on your new home, factoring in all of the variables: the purchase price, the down payment, the monthly payments and the escrows for property taxes and homeowner’s insurance.
There’s a lot more to buying a home than the purchase price. Banks have many loan options to help you achieve your goal of home ownership while respecting your budget, now and in the future.
Most important, you likely don’t know what kind of home you can buy, price-wise, until you sit down with a lender, work through the details and obtain a prequalification. It’s not a lot of work, and it gives you peace of mind knowing that when you hunt for a house, you’re searching in the right territory. There’s nothing worse than to find the perfect place and then realize that the house is out of your price range.
Prequalification also is important for the home seller. When buyers appear without a prequalification from a credible lender, the seller and his or her agent have no assurance that they are doing anything more than wasting their time showing the house.
Is the buyer serious? Does he or she really have the ability to buy? Will the next step in the conversation turn to a negotiation about price and closing date or an endless and frustrating series of responses about needing more time and not being sure?
What’s the best way to get the price you seek for the home you want to buy? Show the seller you’re serious about buying. And the best way to do that is to arrive with a prequalification letter that says, “We’re ready and able to close the deal.”
In my experience, a prequalification letter is the best way to get a seller to take notice and start working with you. Indeed, many real estate agents won’t show homes of sellers they represent unless the prospective buyer has a prequalification letter. It’s just not worth their time.
With a prequalification letter, you’re not committed to taking out a loan. But you get all of the benefits of having a strong financial partner in your corner. Your lender will be available to ask questions, to work with you on the numbers and to adjust if needed.
Prequalification letters don’t expire quickly. Once you have been prequalified, you’re usually good to go for the duration of your house hunt, unless market rates move dramatically or your employment situation changes.
Getting prequalified for a mortgage loan is one of the most effective and easiest steps you can take to achieving your dream of home ownership. And with winter coming and sellers motivated to strike a deal, now is a great time to make your dream a reality.
Dale Lewis is president and CEO of Park State Bank in Duluth. You can reach her at firstname.lastname@example.org or 218-722-3500.