by Michael L. Baker, Sr. Mortgage Loan Officer at Affinity Mortgage.
In today’s lending and home buying environment waiting is the absolute WORST thing you could do. I see it time and time again where a client of mine waits to make an offer on a home and loses out on it, they wait to lock in a rate while they “shop” interest rates and end up with a higher interest rate, they wait to order an appraisal making sure things are just right with their home inspection and it ends up delaying their closing. Below I will break down why WAITING in Real Estate, Mortgages, or honestly just about anything in life usually works out to be detrimental when it comes to making a decision on something.
Waiting in buying a home
Listen, I get it… making a decision about buying a home can be tough. There are a lot of things to consider when purchasing a home. However, my argument is that you should discuss all these things prior to actually going out and looking at homes to purchase. There is a difference between being prepared and making a good decision when it is time to buy and rushing into a decision. You should discuss up front the absolute must haves, and the items that are up for discussion. Then when you get out and look at a house you won’t lose out on the house while you decide if it is the right one for you.
Drawing out the process of buying a home leads to the following 3 issues:
- It costs you money in the long run. With home prices increasing between 6-7% annually, literally each month that you go buy is costing you in a higher home prices. Each month that another house sells for the highest price in the neighborhood it is setting the new bar for home prices. Meaning new homes that come on the market are coming on higher and higher. Don’t wait, buy now!
- In a raising rate environment (like we are in now) it will more than likely cost you in one of two ways; a higher interest rate, or higher closing costs (points/fees).
- It causes heartache, frustration and leads to overall bad experience. As you wait to make a decision on a home and you lose out on it you cause frustration for everyone involved in the process. Your spouse is made because you “lost us out on the perfect house”, your Realtor gets frustrated because they are showing you the 40th house in 30 days, your lender is stressed out because each time you talk to him rates have gone up (through no fault of his own) but he still feels like it’s his fault, and trust me on this, he can hear the disappointment in your voice each time you discuss rates.
Waiting in refinancing your home
This is another issue I see time and time again. Folks spend far too long “shopping rates”. They call 15 different banks and get 3 loan options each and the buy the time they go through their emails their heads are spinning to a point that they might just throw in the towel completely on refinancing. In the meantime rates have gone up again and these same folks feel the need to start the process all over again and it turns into a vicious cycle.
Drawing out the process of refinancing your home leads to the following 3 issues:
- It costs you money in the long run on the payment. If you are refinancing to save $200 a month, each month you wait to refinance you lost another $200. If you are refinancing to take cash out to finish your basement, each month you wait is costing you in inflation (as things get more expensive and the cost of labor increases, contractors charge more for the same job).
- In a raising rate environment (like we are in now) it will more than likely cost you in one of two ways; a higher interest rate, or higher closing costs (points/fees). Does this sound familiar? It is, see item 2 above. I constantly have clients that spend days, weeks or even months shopping rates and when they finally settle on a lender, rates have gone up. However, if you do your research up front by reading reviews, listening to your friends and co-workers recommendations for lenders and decide who you will use up front, then you KNOW you will get a good and fair deal! And if a lender is worth their salt they will have a float down option (meaning if rates get better while your loan is being processed you get the lower rate)!
- Things can happen! Natural disasters and job loss being to the two biggest that we see. Each day that you wait you put yourself at risk of something happening that could significantly delay your ability to refinance or could significantly cost you a serious amount of money (think rate lock extensions). If you were refinancing because things were already tight and it was going to save you $200 a month but you waited and waited and waited to make a decision and then in the middle of the refinance you lose your job, the deal is basically dead (at least until you find a new job). So now you are REALLY in a bad spot. You have lost your job, and you didn’t save that additional $200 a month! In Florida we see waiting cause issues during Hurricane season for instance. You waited too long and the next thing you know FEMA has declared your home in a national disaster zone. Now the underwriter will require a final inspection on your home to make sure there isn’t any damage (this costs you additional time and money — final inspections aren’t free).
The moral of the blog post here is, very rarely in Real Estate and Mortgages does waiting benefit anyone. The more you wait, generally, the more it costs you in the long run. Find yourself a trusted Realtor and Loan Officer and then (wait for it, wait for it, wait for it)… TRUST THEM. Trust your Realtor when they recommend that you should make a move on a certain home because it is a killer deal. Trust your Loan Officer when they say that Thursday will be a volatile day in the market because of the Jobs Report so locking in your interest rate ahead of that is prudent.
People say it is getting harder and harder to trust people in this day and age. I disagree. With today’s amount of social media, online reviewing systems and websites like LinkedIn it has actually become easier and easier to figure out the good from the bad out there. If you have a knowledgeable Realtor that spends their time writing blog posts about current market conditions and they hold LIVE Facebook videos where they discuss changing trends in Real Estate and it just so happens that they have 250 online reviews from past clients at 4.9 out of 5 stars… I can assure you that THIS is someone you can trust!
In today’s environment, don’t wait… trust. Trust yourself and your gut instincts, trust the professionals, trust me!
PS, If it sounds like I can help you, please contact me directly through Linked In, email me at firstname.lastname@example.org or call/text me at 913-735-5363. If you’re not yet ready for a conversation, but you’d like to learn more about me and how I can help you or about the mortgage process in general, including great blog posts to send out to your clients, check out my website at http://www.michaelbakerhomeloans.com.