Home Loan / Lender Question (San Diego: real estate market, 2013, lease)

[calicoolguy]

I am close to making that jump into buying my first place... i am waiting until mid/late February after get my tax money back to jump on ship. I have alot of my stuff ready to go but one question. At the end of march i will be getting a raise at work, roughly 3000 at the end of the year. Will that make a huge difference when shopping for loans or not? The loan i can get now i wouldnt even use it all but just curious on your opinions on waiting the extra month. Im scared will be in middle of spring home buying spree if i wait

[tonyinsd]

Start looking now. Hopefully you will find realtors who are more willing to work with you than the ones I've talked to. I've talked to three. Only one is willing to actually do something. And I don't know if this is true or not, but he says that I need a national direct funding loan provider. I think that's crap. Who the hell cares who the loan provider is as long as they get their money.

So I'm going to talk to another realtor. I know that what I'm asking for is difficult, but at the end of it, if you put in 40 hours of work, and get $3K in commissions, that's a decent rate of return.

[calicoolguy]

Ya man it is a beast getting anything now. I know 2 people that have had similar experiences and took them months to find a place

[sdjimbob]

Originally Posted by calicoolguy

At the end of march i will be getting a raise at work, roughly 3000 at the end of the year. Will that make a huge difference when shopping for loans or not? The loan i can get now i wouldnt even use it all but just curious on your opinions on waiting the extra month. Im scared will be in middle of spring home buying spree if i wait

Underwriters usually require last few paystubs and W2s for proof of income, so I'd be surprised if future income would be considered.

Also not sure what big a difference 3000/yr would make in how much more you could get. On a 30 yr conventional, maybe another 10K?

[kathygrl]

If you've already gotten a pre-approval from a lender and you don't plan on even going up to the maximum loan, then it's really not necessary for you to wait until March. If on the other hand, you are very close in terms of your debt to income ratios then yes, the additional $3000 may give you an edge. And quite frankly, you should be able to use whomever you darn well please as your lender.....sore subject for me as it just ticks me off that some of the Realtors out there are basically trying to force buyers to use a particular lender!!! Another issue that I've seen becoming more and more frequent.....listing agents are asking buyers to "cross qualify" with their lenders, basically for reassurance that the potential buyer is truly qualified. It really is a rapidly changing world in the San Diego real estate market currently with both pros and cons.......crazy low interest rates, prices more realistic then they were, limited inventory, buyers going above asking price, multiple offer situations.
Good luck to you and do your due diligence!!!

[earlyretirement]

Originally Posted by calicoolguy

Ya man it is a beast getting anything now. I know 2 people that have had similar experiences and took them months to find a place

Yep. The inventory is absolutely horrible right now. And something like 35% of the deals are all cash now. Pre-approved letters from a lender don't really get realtors or sellers excited at all these days. Sellers and realtors would rather see bank statements showing you have the cash to buy it.

Realtors I don't think have ever had a great reputation for customer service (yes there are exceptions) but in this kind of environment where cash offers are all over the place it's going to be difficult for a while.

We made an offer and had the pre-approval letter along with 50% cash for a down payment and that didn't get sellers excited at all. In fact, a cash offer was accepted. It will be interesting to see how the market goes but probably much depends on inventory.

[Cabound1]

Question for kathygrl.....

Is being a cash buyer in a price range that is typically non investor (over 500k ) any advantage at all?
You would think it would be with all the trouble qualifying these days.

Thanks.

[shmoov_groovzsd]

calicoolguy,

You got a lot of great info here. I agree, with the 3k bump and how much more that will really make a difference in the grand scheme of things. As the others have said, lenders will be checking your past 6 months paystubs, so really, that bump likely not be a factor for your loan. But that is in an ideal situation, where you have a place lined up already with signed contracts in hand. It could take a while.

kathygrl is totally spot on as well. My colleague just closed on his home last month and told me how brutal it was. Not only for home shopping but the loan.
He was telling me that even though he had a loan all set up (pre approved) the sellers for just about every house they were putting offers in for, were asking for; bank statements, loan approval letters (not uncommon) and a cross check with 'their' lenders/pre-screen. Then after the circus of paperwork, not even get a call back or would the selling agent even answer the phone about any questions. So really IMHO, it depends on the market you are looking to buy in, flippers vs traditional sellers and price range.
No question, when looking at an average Joe salary in SD, the sub 400k market is a bloodbath. Just expect to go in over list at least 3% in some cases if the house is really nice and shows well. Just know, if you think its nice, so have the other people that have seen it. They may/may not have greater purchasing power than you in the sellers eyes (eg. all cash, over 20% down etc).

Just be patient with the home search and dont get too discouraged.
I just sent this blog to a friend of mine and he also saw the same as I have.
Realtor Talk | bubbleinfo.com

Good luck!

[earlyretirement]

Originally Posted by Cabound1

Question for kathygrl.....

Is being a cash buyer in a price range that is typically non investor (over 500k ) any advantage at all?
You would think it would be with all the trouble qualifying these days.

Thanks.

I'm not a realtor but definitely I can say cash offers on expensive properties (jumbo loans and stuff over $1 million) help. Having a pre-approval letter doesn't mean you will definitely 100% will get a loan. I've seen and heard lots of people having hiccups at the 11th hour. Plus there are all kinds of things you have to worry about including appraisals matching up, etc.

With cash it's VERY desirable for the seller because it cuts out a lot of the hassles and red tape. You can typically get a better deal as well because the seller knows you don't have to jump through any hurdles. When we bought our house, we didn't even ask them to get an appraisal as we didn't need one. We did do a home inspection but we made it clear to the seller we wouldn't ask them to fix anything unless it was major. Also, another thing appealing is you can quickly close if you have cash.

From the time our offer was accepted to the time we closed it was about 2 weeks. That was very desirable to the sellers as they were buying another house and they definitely didn't want any hiccups with closing. They could buy their other house with confidence knowing that the deal would close.

You can also do other creative things to try to get the price down. When we bought (mid 2011) we made a lower offer and the sellers came back with a counter offer at the asking price. I told them no way and that we could pay cash and close quickly if they wanted. I also told them I heard they were looking at closing on another house so I told them I'd pre-pay an additional deposit of $50k that they could keep if I backed out before closing. Basically this told the sellers that I was serious and wouldn't back out.

Long story short... we got it at the price we wanted. And to add icing on the cake, we ended up sub-leasing it back to them a few months which was perfect for us because we had already leased a townhouse temporarily as we didn't know if we'd find a house so quickly.

Absolutely you can get some good deals with cash vs. buying traditionally. Back when I was buying I wasn't competing with as many cash buyers but today the market seems very full of them.

[Cabound1]

Yeah, that was pretty much my thinking earlyretirement..... The house I sold on the east coast got many offers, and it really came down to picking the person who would qualify vs the highest offer. No cash offers, so I had to cross my fingers for weeks. That's why I'm going all cash this time.

I'd be interested in your thoughts on which neighborhood to pick.....I'm looking for a small single level place. Commute is not an issue, nor is schools. I don't want to be in the marine layer, nor do I want 90 degree days to be the norm in summer. I would like a little quiet, but I'm used to everything I need being within a 3 mile radius.