This is video transcript of financing Mortgage for Las Vegas homes, condos or high-rise video
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Financing a mortgage for Las Vegas homes, condos or high-rise condos after the offer is made is not only stupid, it has become very risky. This is due to recent changes in the Las Vegas Residential Purchase Agreement that require the buyer to set deadlines for appraisal and removing loan contingency which we discussed in the last video.
Getting a great real estate deal is comprised of two equally important parts
1: Getting a great deal on the Las Vegas home, condo or high-rise condo
2: Getting a great deal on the mortgage loan
The best possible real estate deal fails if the buyer is paying 1% higher interest than he/she should have.
Because one percent increase in interest rate roughly equals 10% price gain in real estate deals.
So buyers who need to finance should exercise due diligence in getting a mortgage loan as well as buying a property. In this video we talk about:
1: When real estate buyers should start the process of obtaining a mortgage loan in Las Vegas
2: Difference between pre-approved and under-written approved and why Las Vegas real estate buyers who need financing should become underwritten approved contingent on appraisal
3: The difference between simple interest rate and Annual Percentage Rate or APR
4: Why you should avoid out of state or online mortgage companies
5: Restrictions on financing a mortgage for Las Vegas condos and high-rise condominiums
Let’s talk about underwritten approved contingent on property appraisal mortgage status
When Las Vegas real estate buyers start the mortgage process is as important as how they go about doing so. One of the deadliest errors buyers make is that they get a pre-approval from a mortgage officer before making offers and start the underwriting process under deadlines and with a gun to their head after getting their offer accepted.
Buyers who want to get the best possible deal from the seller should become underwritten approved contingent on the appraisal for their deal or get as close to it as possible.
Let’s discuss the difference between pre-approved and under-written approved
Pre-qualification or pre-approval means there have been loan calculations made that show how much you “may” be able to borrow. While pre-approval can shorten the processing time for home loans, indicating how much house you can afford, it doesn’t provide any leverage in bargaining with the home seller and it doesn’t necessarily guarantee that such a loan will, in fact, be made by the lender.
Under-written approval contingent on appraisal means you actually have a mortgage loan waiting “Subject only to finding the home, condo or high-rise condominium in Las Vegas and appraisal at the sales price”. The “underwritten-approval” letter represents an actual commitment on the part of the lender.
In order to secure such a letter, it is necessary to complete a formal loan application and have your credit, salary, tax returns, and bank funds checked. If the loan is a good investment, the lender will issue an underwritten-approval letter that provides a commitment for a limited period of time, subject to a satisfactory property appraisal and title search.
This way the buyers know how much they can afford and only need to meet the appraisal deadline because they know they can close the deal quickly and without complications shortly after the appraisal report arrives.
Many mortgage officers refuse to do this but not the best ones. We have made it clear to mortgage officers whom we recommend to our clients, that this is what we want and a few are willing to do so. At any rate, one should try to get as close to underwritten approved as possible.
Let’s talk about different mortgage loan products
Mortgage loans have been designed for different groups of buyers and an FHA mortgage may not be the best option for some and a conventional loan may be better. It is usually best that US active Military and Veterans use a VA mortgage. You need an expert mortgage officer to explain all your options.
There have been changes to private mortgage insurance for FHA loans. Borrowers must pay MIP or (Mortgage Insurance Premium) for the life of the loan unless they put 10% down. And even with 10% down the borrower must pay it for 11 years. Homeowners can save thousands in MIP by refinancing to conventional loans after they have paid down 20% of the loan.
Your choice of a great and knowledgeable mortgage officer in Las Vegas can save you thousands over the lifetime of your loan and we know a few that close deals quickly and can help you know which loan product will work best for you.
Let’s talk about advantages of becoming under-written approved
The reason that cash offers beat higher financing offers is the uncertainty on the seller’s part about the outcome. While pre-qualifying is easy, problems usually show up in the underwriting part of the mortgage process. This is the reason that many real estate deals fail, but cash offers to close the deal.
Being underwritten approved removes much of this uncertainty, prevents problems at the time of escrow and gives your real estate agent or Realtor an effective weapon against competing with cash buyers or other financing buyers who have not done so as well as the ability to ask for concessions from the seller. You better believe that we make sure that the home seller knows that our buyer is underwritten approved.
If you get nothing else out of our website and follow this one piece of advice, we have done our job as 90% of all problems that arise during escrow are mortgage related.
In one case we were assured by our client’s mortgage officer whom we advised our client to avoid that his loan will be funded in 48 hours only to find out later that it was a blatant lie and the loan papers were actually lost. This resulted in our buyer’s losing his earnest money deposit. Masoud had to go as high as Fannie Mae’s vice president to get half of our clients deposit back by forcefully begging for it repeatedly and he hates to beg.
Difference between simple interest rate and Annual Percentage Rate or APR
Needless to say when looking for mortgage loans the buyer should pay particular attention to Annual Percentage Rate or APR instead of simple interest rate, as APR includes other fees that are included by the lender and shows the total cost of the loan.
Why you should avoid out of state or online mortgage companies
One last issue about mortgage loans, do not go for online mortgage companies or out of state lenders and always follow your Realtor’s advice on who to pick. Foreclosure listings inventory in the Las Vegas MLS has been under 7% for the past couple of years, however, an out of state lender asked one of his clients to put down 60% of the home price as down payment due to the high rate of foreclosures in the Valley. We gave them a list of five good mortgage officers in Las Vegas, they picked one who closed the deal with a 3.5% down payment FHA loan.
We have dealt with many mortgage officers and know who can close deals and more importantly who can’t. We refer many clients to mortgage officers and if something goes wrong we can pick up the phone and yell at them and they usually listen since a loan officer would not care much about losing one person’s business but will care about losing many referrals from a good real estate agent.
Restrictions on financing Las Vegas condos and high-rise condominiums
Lastly, while financing single-family houses and townhomes are easy, this is not the case for condos or high rise condos for sale in Las Vegas. Only a few banks finance high-rise condos and in order to get a mortgage on a condominium the condo project has to meet strict guidelines like less than 50% of the units have to be owned by real estate investors and less than 15% of units should be 30 days delinquent in paying their homeowner association fees. We know which condo communities are approved for a mortgage and better yet which lender will finance any condos in town including luxury high-rise condos.
If you want to sell, invest in or buy Las Vegas homes for sale or condos for sale in Las Vegas, townhomes, and high-rise condos please call us at 800-762-4917 or e-mail us. You can find our contact info below the video.
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On behalf of the Saber Team, this is Karen Saberzadeh of Realty One Group and www.lasvegas4us.com wishing you a great day.