2020 was a massive year for real estate, and Montana’s housing market has created favorable conditions for those looking to buy or upgrade to a new home in 2021.
Many people looking to move are unsure how to start the process, especially when purchasing a house for the first time. Even a seasoned buyer has an edge in the market when working with a team to help them navigate the fluctuating world of real estate. Among the crew available to guide homebuyers through the process are mortgage brokers.
Here are five things to consider when working with a mortgage broker.
Contact a Mortgage Broker from the Beginning
Reaching out to a mortgage broker at the onset of the homebuying process is a smart decision because the broker will gather information that can guide the entire homebuying experience.
They match buyers with the loan best suited for their needs, while also searching for the lowest interest rates and associated fees. They are the negotiating party between the borrower and financial institutions.
“The most important thing in this market is choice. There are thousands of lenders looking to earn the business of buyers, as well as families looking to take advantage of low rates to refinance,” says State Farm agent Pam Hansen Alfred.
As a State Farm agent, Alfred offers mortgage origination through State Farm’s relationship with Rocket Mortgage. The lender provides an award-winning digitized mortgage process and Alfred offers this process to local consumers in a face-to-face setting.
First-time homebuyers notably benefit from time spent with mortgage brokers, having their initial concerns and questions alleviated, including the biggest one of all: budget.
“Many first-time homebuyers are surprised at what they can afford,” says Alfred.
Cut Through the Competition with a Preapproval Letter
Under normal market conditions, working with a broker at the start is essential, but the fast-paced movement in today’s housing market makes it imperative. The very small amount of homes available to purchase has become a significant concern, with sellers receiving multiple offers in short amounts of time. Buyers with prequalification or preapproval letters from mortgage brokers put themselves in a better position compared to others.
“On the purchase side, the market is moving quickly. In many areas, homes can sell within a week of listing. That’s why it’s important to have a preapproval letter ready,” says Alfred.
Alfred continues, “Rocket Mortgage specifically provides a Verified Approval℠ Letter which communicates to sellers the buyer is approved for financing. In multiple offer situations, this helps immensely because it creates certainty by confirming my clients’ assets, credit and income have already been approved, helping the loan close faster and avoiding any hiccups along the way.”
Selling Your Current Home and Purchasing a New One Is a Nuanced Process
It has become a common practice for families to sell their homes based on current needs. A couple may put their first home on the market to upgrade to new additions or elect to downsize later as they enter their golden years. In any situation, the process requires a strategic approach and solid communication.
“Many families use the equity in their old home to purchase the new one, and the new place cannot close until the previous one sells,” says Alfred.
Equity develops through years of mortgage payments. By the time a family is ready to sell their home, they have normally built enough of it to profit from the sale. When a home’s value exceeds the present loan amount, the purchase amount from the buyer will cover the remaining mortgage, home equity loans or home equity lines of credit (HELOCs) and the closing costs. What is left from the purchase amount is the seller’s profit.
Homes are usually sold before a new one is purchased. However, there are options for sellers to consider, such as home sale contingencies, bridge loans and dual mortgages. To successfully navigate any of these options, communication is critical.
“I always work hard to keep the whole ‘team’ in communication—buyer’s agent, selling agent and any other agents involved in the sale of other transactions. It can seem daunting, but with a great team and great communication we can make it happen,” says Alfred.
A Low Credit Score Does Not Exclude You from Becoming a Homeowner
Mortgage brokers specialize in researching the best options for their clients. Every borrower’s circumstances vary, and it is a broker’s job to help clients achieve their homeownership goals.
Luckily, there are a variety of loans available for those with less established credit. A lower FICO score can influence factors such as the borrower’s down payment and mortgage insurance costs, however, larger down payments also decrease monthly amounts. Working closely with a mortgage broker on your best path will include a discussion on your current financial state and future goals to make sure you realize them.
Lean on a Local Professional in the Field for Their Expertise
The pros and cons of each loan offering and the accompanying details matter. From mortgage types to rates and mortgage insurance, brokers help buyers and refinancers evaluate the best avenues to follow. Because they live and breathe their profession, clients benefit from firsthand knowledge that can procure short-term advantages (such as quicker closings) and long-term advantages (such as lower interest rates). Mortgage brokers also follow trends and changes in the lending industry and can overcome any challenges to keep your loan on track.
For further assistance on your mortgage origination needs, reach out to Pam Hansen Alfred and her team at (406) 453-6010, stop by their offices at 2817 10th Ave. So., or visit www.pamhansenalfred.com.
2817 10th Ave S
Great Falls, MT