Banker offers special Lock and Shop program on home purchase
Mortgage banker: Dave Stambone
Home value: $407,500 singlefamily purchase in Southbury Loan amount: $387,125
Loan terms: Conventional 30year fixed rate at 4.99 percent, no points
Backstory: A local real estate agent referred a client to Stambone to become pre-approved for a mortgage.
The purpose of becoming preapproved is to determine an individual’s maximum buying power in order to purchase a home. This is a necessary piece that must be done prior to viewing homes with a real estate agent.
Furthermore, a pre-approval letter from a mortgage professional is required by the real estate agent listing a home when accepting offers on behalf of a seller. The letter limits the risk of a deal falling through and increases a buyer’s credibility.
A thorough review of income, employment, money saved and credit must be considered when deciding what someone may qualify for.
Stambone and the buyer arranged a time to discuss the buyer’s plans and eligibility over the phone.
The buyer was living with a relative rent free and had no intentions of purchasing a home for at least six months. Confused, he thought it may be too premature to go through the formal process of becoming pre-approved for a loan.
Stambone explained to him the value of having the letter in place in the event of suddenly finding the right home.
The total amount the buyer wanted to be qualified for was right on the edge allowed per industry guidelines. There was no room to qualify for a higher payment and adding a co-signer was not an option.
A primary concern was interest rates rising and how that may affect the buyer’s future eligibility. If rates continue to rise, this would reduce the amount he would qualify for and would create a road block for him.
However, Stambone and his bank offer a unique Lock and Shop program for their clients. What makes this program different is that a pre-approved buyer may lock an interest rate for an extended period of time without having a contract on a specific home.
Most banks and lenders will require a signed agreement, including a closing date with a seller, in order to secure a rate. On average, standard rate locks will typically max out around 60 days. The Lock and Shop program allows a buyer to lock an interest rate for up to 120 days, which was an attractive option to the buyer.
He found the perfect home and closed 100 days within obtaining his pre-approval.
Dave Stambone, Total Mortgage Services,
203-240-9611, [email protected]estambone.com