Sometimes a mortgage is not the answer.

Yes, I know it sounds strange to hear that from someone who makes his living writing mortgages.  In our real estate market; Boise Idaho, there is a shortage of affordable homes so most homes are selling at or above asking price and they have back up offers on them.

I got a call from a home buyer who was on their third turn downed loan application.  They were also under contract and supposed to close in less than3 weeks.  The loan they were seeking  was not one that could get approved.  Most real estate purchase and sale agreements have a clause that says the applicant will seek a mortgage and provide a pre approval letter with in a short period of time, typically 2-3 days.  I guess the other agent or seller didn’t ask for one, so they didn’t have to disclose that they are not pre approved for a mortgage.

Now this home buyer has the luxury of being able to pay cash for the home but didn’t want to do so.  In their situation, that is the only way to buy the home within the contractual time frame.  After examining the situation, I recommended this.

There is a way to pay cash for a home and then get the loan afterwards, recouping the investment.  Its referred to as Delayed Financing in the Fannie Mae guidelines.  You have to show that you paid cash for the home and it was your funds to begin with, but you can get your money out shortly afterwards.

The other lenders, both online out of state banks, didn’t bring this up as an option.

Bottom line is get your loan application in ahead of the offer and have a pre approval.  This will save lots of stress during the home buying process.

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