Adventures in House Hunting, Buying a House, Mortgage Loan

Money has never been cheaper to borrow

Now that the election is over and half the county is cheering and the other half jeering, let’s get back to the idea of buying a house. Since interest rates are at historical lows, money has never been cheaper yet simultaneously harder to borrow.

That’s because the interest rates are at historical lows, artificially induced by government interference. However, underwriting requirements have not only gone back to pre-boom criteria, they have actually overcorrected and are even more draconian than ever. It’s one thing to want to see three months of bank statements, it’s another thing to want college transcripts and how deep your fantasy league went into the playoffs.

During the boom years there was this whole pre-qualified versus pre-approved thing. The terms were used interchangeably so I often have to think about it carefully to remember which is which. Pre-qualified simply meant that based on some simple questions and back of the envelope calculations, a mortgage broker gave you a ball park figure of how much home you could buy. Basically if you had a job and a pulse, you could get a loan. Sometimes only one of those was required.

“Pre-approval” means you have met with a loan officer, your credit files have been reviewed and the loan officer believes you can readily qualify for a given loan amount with one or more specific mortgage programs. Based on this information, the lender will provide a pre-approval letter, which shows your borrowing power.

These days especially, Sellers like pre-approved buyers because there’s less risk the deal won’t go through.

So we are doing our best to make sure all our ducks are in a row and have not skeleton’s in their duck ponds. With money being so cheap, it is tempting to buy at the top of our price range. With two condos on our tab, it might be more prudent to rein that temptation in.