Now is one of the best times to buy a home, advises Senior Mortgage Advisor Grant Norris of RPM Mortgage. Although there are a number of factors working to make potential buyers apprehensive about jumping into the housing market, a combination of reduced prices and record-low interest rates should encourage would-be homeowners to seriously consider purchasing a home.
“Prices have dropped significantly between 2007 and 2012,” said Norris. “They are on an upswing, but from an opportunity standpoint, prices are still lower than they were at the peak [of the housing boom]. Even more importantly, interest rates are hovering around 50-year lows, so the cost of ownership is the lowest it’s been in a very long time.”
According to Norris, these conditions have resulted in greater numbers of consumers being able to afford to purchase a moderately-priced home than at any other time in recent memory.
At the same time, Norris acknowledges that many potential buyers have reservations about venturing into the housing market. “It is definitely harder to get a mortgage now than it was prior to 2008, but it’s not impossible,” advises Norris. “In my 30 years as a mortgage advisor, I’ve seen the pendulum swing from where mortgages were somewhat difficult to get to where they were ridiculously loose, and then ridiculously strict. Now we’re coming back to more moderate ground.”
Until potential homebuyers speak with an expert, cautions Norris, they are likely to get misinformation from friends and family about the difficulty of the mortgage process that may discourage them from home ownership unnecessarily.
The key to a successful home purchase is expert help, says Norris. “If you have somebody who understands the system and can guide you through it, [the home-buying process] is not going to be nearly as difficult as you think it might be.”
One potential mistake that first-time homebuyers should be wary of, according to Norris, is seeking financing through their “big bank” rather than through a licensed mortgage broker. “I get calls two or three times a week from realtors who have been working with clients based on a pre-approval letter from their bank, only to find at closing that the loan won’t be approved,” says Norris.
“The reason for this is that the front-end employees at most big banks aren’t required to have the same skills and certifications as a mortgage broker, and often they don’t receive adequate training on mortgage products in general, or even their banks’ own products. The decision-making is done on the back-end, after a lengthy document-gathering process. By the time the loan gets to a decision-maker, it is often at a time when final loan approval is crucial, and it comes out at that time that there is a problem with the underwriting, the appraisal, or both.”
As a contrast, mortgage brokers are held to a higher standard of accountability by both their clients and the regulatory bodies who oversee mortgage lending. “The job knowledge that a mortgage broker brings to the table is vital and details are critical. If I see a potential problem during the pre-qualification process, we tackle it right away. The loan doesn’t go sit in a file for two or three weeks until someone’s ready to look at it. The bottom line is, I have to be honest and accountable with my clients. If I wasn’t, I wouldn’t be able to stay in this business for 30 years.”
For more information on Grant Norris and RPM Mortgages, visit http://www.rpm-mtg.com/agent/grant_norris.