It’s cold outside, winter is here, we’ve wrapped up the Holidays and less people are out and about. Yes, this is all true because we live in the midwest! So how do the winter months affect the housing market and what does that mean for you as a buyer? Have you ever heard this said, “Oh, I think we’re just going to wait until spring”? We’ve all heard it and it can be applied to many things but when it comes to the housing market, we want to challenge you to stop and think about that. Statistically, it’s true; the housing market in our area slows down over the winter for all the reasons we stated so there are less homes being sold in the winter months. If you’re a buyer, how can that help you and why should that motivate you? Well, we could easily argue it’s been a “seller’s market” and substantiate that with the number of home sales where the seller is getting multiple offers presented to them for their home. Buyers are having to compete with one another as they’re trying to find a home. Their offers are being carefully looked at and buyers are constantly being evaluated not just by the dollar amount they’re offering but also, what the buyer is asking the seller for and what the buyer’s financing looks like. In the end, the seller will work with their listing agent and carefully review all the offers and compare them. Sometimes, the timeline of closing comes into play, too. Most importantly, however, the seller wants the assurance that the transaction will close and close on time. There’s nothing worse for a seller to be in contract, not accept further offers, and then have the transaction fall apart and not be able to close on the sale of their home.
So, we know it’s competitive but what does winter have to do with that? If the mind-set of most people is, “I’ll just wait until spring” that means there are less buyers in the winter, proven by the decrease in transactions that close through the winter months. If you’re a buyer, why wouldn’t you want to look in the winter when there are less people looking? Think about it, if you happen to find that perfect home that you fall in love with, wouldn’t you rather be writing an offer when there are less buyers to compete with? We want to encourage you as a buyer to bundle up, get your boots on and keep looking, even through the winter months! It can’t hurt. While you may not be able to smell the roses, see the landscape at its beauty and look at the nice, green grass; you do get to see how the house functions and settles in the dead of the winter. Heating, traffic patterns, places to drop wet boots, access to garage, parking, etc. can get overlooked in the summer months but when it’s freezing cold outside, we’re reminded of it instantly.
January also reminds of the tax season and for many people that means they have tax refunds coming. If you’re thinking about buying a home at all, now might be the perfect time to apply. There are loan programs out there with very low amounts for down payments and some of these can be combined with grant programs such as MyPad down payment assistance, Iowa Finance Authority (IFA), etc. That tax refund you’re getting might be enough to get you into a home! Don’t assume you have to save up a certain percentage for a down payment, let us help you figure that out. There’s really two main components we will look at; your income and your credit. The income bracket will push you in or out of certain programs with income guidelines. Income is also used to calculate your debt-to-income ratio, which is also critical. Credit scores work in the same way but the most important thing is to work with an experienced lender who can look at your scenario, work through all the options out there and figure out the best loan program for you.
Let’s go back to the single most important part of being a good buyer who can compete in a “seller’s market.” You need to be pre-approved. There is a difference between being “pre-approved” versus being “pre-qualified” and sometimes those can just be words that are used differently from one lender to another but here, at Heritage Bank, the difference is significant. When we issue a pre-qualification; it means the buyer has given us some information and we can say, “based on the information you’re giving us, it looks like you’d be approved for X dollars.” However, we have not verified the information they provided, meaning the buyer has not supplied pay-stubs, W-2s, etc. and the file has not gone through the underwriting process at all. When we issue a Pre-Approval letter it means we have taken a full application, pulled credit, verified income and run it through our system to ensure this buyer is ready to go. It is our recommendation to have every buyer be fully pre-approved, so we can issue a very strong pre-approval letter. Quite frankly, anything less than that puts the buyer at a complete disadvantage. When we say a buyer is pre-approved, sellers can know this buyer is ready to go and the transaction will take place on time.
It costs you, as the buyer, absolutely nothing to get pre-approved. Gather up your most recent pay-stubs, your W-2s and, if you’re self-employed or commissioned, you will need your income taxes also. You can start the process by applying online if you wish. Otherwise, give us a call and we will gladly walk through the application together on the phone. Even better, call us to schedule a time to meet with our mortgage professionals. We know there are a lot of questions because buying a home is the biggest purchase most consumers will ever make. We’re here to help you every step of the way. Even if you’re thinking about buying in the spring, you should still be applying now so that you can get your things in order. Often, we find there are one or two additional steps the buyer needs to take and if that’s the case, planning ahead gives you time to do that.
Home ownership is just a few steps away and we’re excited to bundle up and walk those steps with you!
*As published in the January Edition of the Siouxland Women Magazine.