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Although purchases made with all cash are common in Los Angeles, most Buyers will get mortgage financing.  If you are buying all CASH, make sure the funds are (or will be) liquid when you need them.  It can take time to liquidate investment accounts and it can also take some time to get cash into the United States from foreign banks.

For those of you who will be obtaining a mortgage loan, it’s very important to get PRE-APPROVED (not just pre-qualified) before you do anything else.  Lending requirements are much more strict than they used to be.   You can work directly with a lender such as Wells Fargo, Bank of America etc. or contact a mortgage broker (I can put you in touch with some great mortgage brokers).  They will need to verify your income, check your credit etc.  It doesn’t hurt to shop around to see who can give you the best rate and terms but avoid having your credit pulled numerous times or it will adversely impact your credit score.   If some of your down payment is coming from a relative, let the lender know that too – most lenders require gift money to be “seasoned” in your accounts for a period of time.    Getting pre-approved  is important not only so you have a clear understanding of what your budget is but also because we typically need to demonstrate your qualifications to the Seller when submitting your offer.  It’s very common to be in competition with other Buyers when you find a desirable and well-priced property and most Sellers won’t proceed with a Buyer who can’t demonstrate their qualifications up front.  A strong offer mush have a pre-approval letter and verification of funds attached.

You should also check with your mortgage broker BEFORE making any large purchases such as buying a new car.  A car loan would change your debt-to-income ratio and possibly change what you will qualify for in a home purchase.  Changing jobs after you’re under contract to purchase a home can also complicate things.   Also, borrowing money from a friend rather than a relative can be a problem so don’t do anything like that without first clearing it with your lender/mortgage broker.   The lenders will scrutinize your bank accounts and will often need explanations for even small deposits into your accounts going back several months.   Make sure you have documentation for your transactions.  If for example, you sell a car and deposit the proceeds in your checking account, make sure you have a copy of the bill of sale.

It’s wise to include proof of funds (providing proof you have available enough cash to cover the down payment and closing costs) when your offer is submitted.   Get your most recent bank statements and black out your account numbers so they can be submitted with your offer.

Contact Kevin at (310) 200-4916 or email kevindbacher@gmail.com

 


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