For most of 2018, the San Diego housing market was ruled by condo sales in the various downtown districts. Real estate analysts believe San Diego condo mania will subside a little in 2019 thanks to price stabilization and an overall maturation of condominium projects completed in recent years. Nonetheless, the prospects for bidding wars and high demand are still very high for 2019. What this means for prospective buyers looking at downtown San Diego condos is that they should still look at mortgage preapproval letters as one of the most powerful weapons in their house-hunting arsenal. Here are five reasons you should get preapproved for home financing before you start searching for the perfect condo for sale in downtown San Diego.
1. Not All Banks Will Finance Condo Purchases
This is the most important reason you should approach lenders before embarking on your house-hunting journey. Banks have various motives for refusing to lend, one of the most common being a lack of comparable sales. If for any reason the unit you want to place an offer on is located within a building where no sales have been closed in the last three months, the bank’s internal underwriting guidelines may preclude lending.
2. Real Estate Agents Will Pay More Attention
Mortgage preapproval documents make real estate agents very happy because they know their chances of closing deals are greatly improved. Certain information contained in preapproval letters lets real estate agents know what you’re looking for and what you can actually afford. Moreover, they can contact listing agents and let them know they have a client with the verified financial clout to enter a bid.
3. You’ll Know How Much Condo You Can Really Afford
The home lending process has changed considerably since the heady days of the real estate bubble that culminated in a meltdown of the mortgage markets circa 2008. These days, mortgage loan officers emphasize home affordability for the benefit of borrowers. When a preapproval letter is issued, the financial worksheet therein has been calculated to reflect your financial ability to make monthly payments beyond principal and interest. It also includes condo association fees, insurance, taxes, utilities, and, in some cases, maintenance payments.
4. It Increases Your Chances in a Competitive Market
As the situation stands in early 2019, the downtown San Diego real estate market still favors sellers, which means the chance of your offer being approved hinges upon verification of financial standing. Entering a bidding war on a choice listing without a mortgage preapproval isn’t a good strategy because sellers won’t take the offer as seriously.
5. You’ll Have an Easier Time Getting an FHA Condo Loan
Even though the FHA program has been running with diminished efficiency over the last two years, FHA loans are still being offered for condo properties. The process still runs smoothly at the retail bank level, but there’s a greater need for loan officers to determine if borrowers and the units they’re interested in will qualify. To this effect, it’s better to start the process early with a preapproval letter from an FHA lender.
If you’re getting ready to shop for condos, one of the shrewdest things you can do is get approval for a home loan before you start looking at listings. Your next move should be to find experienced real estate agents who know the condo market and the nuts and bolts of financing condos. The experts at 92101 Urban Living can help you find your perfect condo, and they’ll be with you along every step of your home-buying journey. Call one of our friendly agents today at 619-649-0368.