Does the home always go to the high bidder?

There’s no secret that it’s an extremely competitive real estate environment out there right now if you’re looking to buy a home. Supply is extremely tight. In the market for existing homes, which accounts for about 90% of the overall housing market according to CNBC, if sales continue at their current rate, there are only 4.3 months’ worth of supply available.

In the market for new homes, things are slightly better. Given the number of new homes available on the market, it would take 5.7 months to exhaust supply. For perspective, the housing market is considered in balance between buyers and sellers if there’s a six-month supply. However, the news isn’t all rosy there either. The number of new building permits and the level of new construction actually happening were both the lowest they had been in nine months in the report.

In this kind of market, it’s important to take any advantage you can get. There may be multiple offers on a home within hours of it going on the market in some of the nation’s hottest areas.

There are many things that can set your offer apart and having a high bid can certainly help, but you may be surprised to find that the high bid doesn’t always win.

Get Approved Before You Shop

There are many things you can do to make your offer more appealing to sellers. However, one of the most important things that you can do is to make sure that you have your financing lined up.

Getting approved for a mortgage before you shop can be a big deal when there are multiple offers on the table. Some lenders call this preapproval, but regardless of what it’s called, you need to make sure your lender is clear with you about what it means because there are different types of approvals.

Prequalified Approval

A Prequalified Approval involves the simplest process. The lender pulls your credit to get a look at the debts listed on your credit report. This includes revolving debt like credit cards, as well as installment payments like personal, student and car loans as well as your mortgage if you have one. They also get your three-digit FICO^® Score from all three major credit bureaus. The median FICO^® Score is one of the things that helps determine which loan options you qualify for.

In addition to pulling your credit, the lender will ask you for verbal or written (but unsubstantiated) statements regarding income and assets you have available to qualify for the mortgage.

Your debt payments will then be compared against your monthly income in order to calculate your debt-to-income ratio (DTI). This helps determine which loan options you qualify for and how much you can afford.

Because your income and asset statements are unverified, this serves as a good estimate of what you might be able to afford – but that’s all it is. If you’re in a competitive bidding situation, sellers might very well pass on your offer because they don’t know how seriously they can take it.

Fortunately, our pre-approvals at Carlson Mortgage are a lot more thorough and leave no room for errors. Please see our Pre-Approval Page for more information.

Posted by: Carlson Mortgage – a St. Louis mortgage broker providing home loans in the state of Missouri. We are routinely ranked as a #1 mortgage broker in Missouri on Yelp, Google and Zillow. We can be reached at (314) 329-7314 seven days a week. Let us be your source for some of the lowest mortgage interest rates in St. Louis on first-time home buyer, conventional, FHA, Veterans (VA), Jumbo and condominium (condo) financing. Since 2004, we’ve been providing home loans and mortgage services in St. Louis that are tailored individually to your unique needs and to your financial situation. Our loan officers speak English, Spanish and Russian. Call us today to inquire about home loan interest rates, to get pre-approved for a purchase or a refinance mortgage, or if you have any general mortgage lending questions.