One of the keys to making sure you’re getting a good deal, one expert says, is making sure you shop around for a loan.
PHOENIX – Buying a house in the valley has become more and more difficult since the start of the pandemic, and one of the reasons for this difficulty is that the large institutional buyers have a lot of money and have decided to try to make grow that money by buying houses.
They often do this with cash offers well above the price a seller asks.
Most first-time buyers need to finance the purchase of their first home, apply for a mortgage, and pay it off over 15 to 30 years.
Financing can cause problems in the home buying process, which is why many sellers prefer to go with a cash offer rather than a financed offer.
Without contingencies, the sale is almost immediate, and a quick close allows a quick money transfer. The sellers can then take that money and buy their next home.
First-time homebuyers can’t compete with hedge funds, limited liability companies, and other businesses that have seemingly endless amounts of money, but a number of businesses at least help make it right. more competitive by allowing even first-time homebuyers to make offers without the unexpected. just like a cash buyer.
Knock is one of those companies. The mortgage lender and loan originator will guarantee a mortgage and its closing date, without unforeseen events, to allow a potential buyer’s offer to be more competitive, according to CEO Sean Black.
“What’s happening in the market right now is that sellers don’t want contingencies, they don’t want to know that your mortgage is bid-contingent, your offer is contingent on mortgage closing an certain day, ”Black said. “And if it doesn’t close that day and is delayed, they incur inconvenience and uncertainty.”
OpenDoor and Homie will do the same.
This may give an advantage to new buyers, or any buyer, but Dr Deirdre Pfeiffer, associate professor of town planning at Arizona State University, said anyone interested in agreeing to this type of arrangement should understand what they’re doing. commits. , more precisely, what conditions an agreement defines.
“Terms meaning interest rate, fees, are there prepayment penalties?” All of these things, ”Pfeiffer said.
One of the keys to making sure you’re getting a good deal, according to Pfeiffer, is making sure you research a loan. This can be difficult when the speed of home sales leads many potential buyers to bid before they’ve even set foot in a home.
“Talk to other lenders,” Pfeiffer said. “Compare the terms offered by these new cash-buying lenders to other commonly used conventional lenders. “
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