This week’s Highlights:
- Some things to note about home sale contingencies
- Does your credit score really matter?
- Mortgage Rates for this week
Client experience with home sale contingencies
There continues to be a ferocious appetite among buyers and not enough houses for sale. We have a client looking for a home in the Germanton/Brookfield area, including Sussex and Menomonee Falls, in the $350,000-$400,000 range. We took a look at listing prices and at the time of the search, there were 88 homes that fit what they were looking for. 17 of them already have offers, 11 do not, and on the 17 homes with offers, the median number of days between listing and offer is 7 days.
The interesting thing about home shopping right now is the way showings are being set up. Of the few available homes out there right now, our client was only able to view one on Friday. The strategy we’re seeing is the house is listed on the MLS on Tuesday or Wednesday, no showings happen until Friday, sellers are getting a bunch of offers right away, and they’re making their decision by Sunday. This all comes down to how much over the asking price people can afford to pay.
If they offer $395k, or $25k over the asking price in this particular scenario, and the appraisal miraculously comes in at that number, they’ll need about $22k total to buy (buyer wants to put 5% down). Their monthly payment in that scenario will be $2,000. Another option would be to write an offer at $395k, then give the seller $10k wiggle room, as long as it appraises for at least $385k. Third scenario is giving $15k wiggle room. This way they’d purchase for the $395k with appraising at $370k. Their payment will only be $61 more a month.
Learn how to get the best rate for you with Accunet Mortgage and our team of refinance experts—click here to get started.
3 Contingencies on a Wisconsin offer to purchase
- Inspection Contingency
- Appraisal Contingency
- Financing Contingency
These are also affectionately known as “The Get Outs,” because these are how you “get out” of a deal if you decide it’s not right for you.
Buying a new home? Start here so you know what to expect from the process!
Why credit score is important while buying a home
While your credit score is extremely important for buying a home and getting a mortgage, it’s not for the reason you might think it is. Modern mortgage lending is not really about whether you’re credit-worthy. This is about manufacturing to the specifications of those guys called Fannie Mae and Freddie Mac. The lending company isn’t REALLY your lender. The actual lender is the end recipient of your monthly mortgage payments.
When you pay your mortgage, you are creating investment-grade securities. The lender simply collects the monthly payments and passes them along to Fannie, who then passes them along to the state teacher’s pension fund. The lender doesn’t actually have any say in it, so when you go through the process, there are a lot of rules that need to be followed that cannot be changed by the company collecting your payments each month.
On a $250,000 purchase with 25% down and escrowed for your taxes, you could do a zero loan cost option for 3.25%, and the APR is 2.2%. At 2.99%, the APR is 3.1, but it would cost you $3,900 in order to lock it in.
Another reminder that while the 2.99% rate looks better than 3.2% initially, your payments could be totally different if you went with the higher rate. Make sure you’re looking at all the options instead of just always aiming for the lowest rate.
Lock in your rock-solid pre-approval before rates continue to rise—click here to get started.