Name terms over price. So what exactly does that mean? Let’s say you find a house you want to buy for $510,000, and being a savvy buyer, want to get a deal. So you offer the seller $500,000 instead of $510,000. Offering $10,000 lower on the price results in you saving $63 per month. Instead, you should ask the seller to pay $10,000 of your closing and rate buydown costs. By leaving the price at the asking price and having the seller pay $10,000 in fees to reduce the interest rate, the monthly savings exceeded $166 per month!
But this monthly saving is only the tip of the iceberg. The savings of interest on the higher loan amount with a lower rate saved $20,000 in interest in the first seven years and over $68,000 in interest over the life of the loan. So how do you get this? Name the terms over price.
Presenting a stronger offer. A strong offer can include a larger earnest money deposit, a fast closing date (usually desired by the seller but not always), and a rock-solid loan preapproval or even full approval. To elaborate, often lenders offer preapproval, where they pull the credit report to know your credit scores and debts, verify your income with w-2s and pay stubs, and confirm your assets for the down payment and closing costs. With all this information, the lender can issue a preapproval letter and usually has obtained an Automated Underwriting System approval from the software lenders use. This is a solid pre-approval. However, there is yet another step some lenders offer, and that is to send the file to the human loan underwriter and obtain full approval. Having this form of approval is much stronger and can make the difference in having your offer accepted over another.
Use professionals with excellent reputations. Additionally, having a Realtor and lender that are full-time, well-experienced, local, and have great reputations can make all the difference. Listing agents who counsel sellers about offers look at the reputation of the lender and other agent and the track record of both. Lenders that are known for providing weekly updates to both listing and selling agents have a competitive edge.
This information is not intended to be an indication of loan qualification, loan approval or commitment to lend. Loans are subject to credit and property approval. Other limitations apply. Rates, terms and availability of programs are subject to change without notice. State disclaimer: loanDepot.com, LLC NMLS ID 174457 ML-4972.| WA: Licensed by the WA State Department of Financial Institutions, Consumer Loan Company CL-174457. | ID | CA: Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act CRMLA 4131040.