* * * * HARD CORE REAL ESTATE TALK * * * *
AVOIDING CONTRACT FAILURES is important for home buyers. If you have a contract of sale on a home in Maryland or Northern Virginia, make sure that the financing is in place and that your loan officer is doing their job.
DON’T LOSE YOUR DREAM HOME because of poor financing letters.
We regularly read about contracts that “fall apart” because the buyer cannot get financing. Homefinders agents will make sure that you, our home buyer, are aware of the critical dates in your contract.
Make sure that your loan officer understands that they need to get the mortgage financing process completed sooner rather than later.
Experienced buyer’s agents in MD and VA know that a missed deadline in the contract can cause a home buyer to lose a home.
Use a Financial Statement! Agents need to learn to read the numbers!!
Homefinders.com agents know how to read a financial statement. We will alert you early on if there are matters in your financial profile that need to be addressed BEFORE you submit a contract offer.
We use a simple Financial Statement. We use a simple calculator. We look at our buyers assets and liabilities and “qualify” our buyers or buyers who write contracts on our listings.
We do not rely on loan officers to qualify. Qualifying a prospective home buyer isn’t rocket science. This is a simple calculation. We’re not qualifying buyers for credit and we rely on trusted loan officers to do that. We use qualifying ratios to determine price range. However, the agent needs to do two calculations. One for the ratio of mortgage payment/income and one for all debt/income.
FRONT RATIO/BACK RATIO. We use ratios of 30% for an estimated PITI/gross monthly income and All Debt/monthly gross income. 30% of your income is an average for home buyers to spend on housing. Many buyers prefer to pay less. Some are willing to spend more.
30/40%. The concept was learned in real estate school. It is further perfected in our CE classes for Real estate finance. It’s important and separates the agents who consistantly have successful closings from the agents who simply write a lot of contracts.
Step 1. Provide the buyer with a Financial Statement Form.
Step 2. Run a qualifying loan amount based on 30% of Gross Monthly Income.
Step 3. Add the down payment, if any, for the estimated price range.
Step 4. Run a qualifying 40% of gross monthly income for all debt.
HOMEFINDERS.COM agents and brokers know how to qualify and back it up with help from qualified loan officers, if there are any questions about credit.
When writing an offer, the first document is the Financial Statement handed to the buyer to complete while the agent runs an Estimated Closing Cost. Those two documents alone will determine whether or not the offer should even be made. The Financial Statement is going to give the agent information to qualify a buyer and the Estimated Buyer’s Closing Costs is going to put in writing the cost to close. Often buyers are surprised by these numbers. Sure, if the buyer’s have made loan application they should have received a Good Faith Estimate from the loan officer. Yet, every week we read of buyers who are “disqualified” at the last minute.
This is just good business practice. The cost of a failed contract is enourmous to the buyer and seller, not to mention the agents and brokers. Failed contracts are almost completely avoidable.
