In today’s hot market, it pays to prequalify for mortgage
By Linda Greenstein GLOBE CORRESPONDENT MARCH 16, 2018
When Ashley Parks and Matt Nermoe put their Winchester condo on the market in February, they received an incredible 43 offers in the first week. Though the average home price in Winchester is over $1 million, there’s still a stampede of people who want to live there. The town’s top-rated schools, vibrant downtown, access to outdoor recreational spots, two commuter rail stations, and neighborhood feel make it one of the most attractive destinations in Greater Boston.
So how did Parks and Nermoe choose which offer to take? They let their realtor guide the way. “It is not about who is willing to pay the most, but instead about the financing,” said Philip Vita of RE/MAX Leading Edge in Winchester. “Evaluating buyers is a painstaking process. We want the process to go as smoothly as possible. A buyer who has local financing or works with a lender that we know is efficient and accessible is important.”
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In today’s fast-moving real estate market, prequalifying and securing a mortgage quickly is essential.
“You cannot be in the market without prequalifying,” said Stephan Coufos, a partner at Coco, Early & Associates in Andover. “I get clients to meet with a professional mortgage broker to determine what they can afford and what can impact their financing. This helps avoid heartbreak.”
Chris Scangas and Jamie Wang, both engineers who recently graduated from the Rochester Institute of Technology and are friends, decided paying rent didn’t make sense financially. So the 22-year-olds worked with Coufos to buy a condo in Waltham and build equity.
Coufos sent them immediately to get prequalified. “Meeting face-to-face with a lender, knowing who you are dealing with, and being able to reach them if or when there is a problem is vital,” he said.
With big banks and online lenders that handle thousands of applications, you risk getting lost in the shuffle, some real estate pros said.
“I actually had a buyer last year that lost a home because they were dealing with [a major national bank],” said
Debi Hauer of Keller Williams Realty Showcase Properties in Braintree. “Every time there was an issue, they were dealing with a different person online.”
Gabrealla Marks recently worked with Hauer to make the jump to home ownership in Brockton.
“I was living in a home owned by a family member,” said Marks, 30, a single parent with two daughters. It sold quickly, and I had a week to find a home. I was prequalified, but when I was young, I was dumb with some credit issues. Those long-ago issues made it awful to get through the mortgage application process. I never would have gotten through it without the help of Debi.”
Hauer sent Marks to a mortgage broker with a local franchise, Fairway Independent Mortgage in Hingham.
“A broker works with a variety of lenders, versus a mortgage banker that is one lender,” said Hauer. “In Gabrealla’s case, her mortgage broker provided more options and was able to match her with a lender that was more understanding about her credit and family renting history.
“Finding a good rate for the mortgage is important, but not as important as moving quickly and working with a reliable lender. Since the Internet came into play, most mortgage lenders are in the same range; currently, rates are in the mid 4s to around 5 percent. Credit history and the type of loan can impact the rate.”
Even with prequalification, Scangas and Wang found it challenging to get an offer accepted until they bought their Waltham condo.
“We lost two properties during our search,” said Scangas.
“We learned that we couldn’t hesitate and we had to go in strong with an offer,” said Wang. “When we got to the third property, we came in fast and strong and were successful.”
Their experience is not unusual in Greater Boston.
“I tell buyers that getting into the current real estate market is like jumping on a treadmill at full speed: hop on and hold tight,” said Vita, the Winchester real estate agent. “It has become typical for buyers to waive home inspections, and now they waive just about every financing contingency such as having to sell a current home.”
Since the lending marketplace is so competitive, terms may be negotiable. Scangas and Wang liked CrossCountry Mortgage in Danvers, where they had prequalified, but they saw online Wells Fargo offered a lower rate.
“We negotiated with CrossCountry to match the Wells Fargo rate,” said Scangas. “We then negotiated to match the lower closing costs, too.”
Parks, 33, and Nermoe, 40, are experiencing the mortgage market on both sides as they sell their Winchester condo and buy a larger home better suited for their two young children.
“Prior to making an offer on the single-family home, our prequalification was in place,” said Parks. “We waived any contingency about selling our condo to improve our offer. We were anxious to get it done because mortgage rates have been climbing.”
Based on family recommendations, Marks and Nermoe used Members Mortgage in Woburn — a firm that connects customers to credit unions — to finance their single-family home purchase.
“Our previous mortgage was with Wells Fargo,” said Nermoe. “We never had a problem, but we appreciate the customer service approach of the local lender.”
Parks agreed. “Our realty team took a lot of time to walk us through the mortgage process, communicate about timelines, provided recommendations on lenders they had experience with, and on the selling side, they confirmed all the preapprovals for offers. Really, they held our hands,” she said.
For her Brockton home, Gabrealla Marks also found working with a local mortgage company was the right choice, especially when she was thrown a curveball she didn’t expect.
“In the middle of the process I lost my construction job,” she said. “I was very fortunate to find another quickly.”
For the US Department of Housing and Urban Development’s tips on shopping for a mortgage, go to hud.gov/sites/documents/BOOKLET.PDF.
Fairway Mortgage - Herb Devine can be reached at http://www.herbdevine.com.