There’s not a worse feeling than finding your dream home only to get outbid, and in today’s competitive market, bidding can turn intense very quickly. With inventory low, a dozen bidders might be going after the same home you are. Here are a few pointers to help you avoid getting outbid:
Turn in all your loan paperwork prior to making an offer. In some cases, you’re going to be competing with cash buyers, so they aren’t going to have to wait for financing approvals. Put yourself in the seller’s shoes. Wouldn’t you prefer doing business with a cash buyer who can close a deal quickly? That’s why it is so important to stay a step ahead of the game by making sure your mortgage lender has your source of down payment funds, asset documentation, credit report and income documentation. That improves your chances of closing promptly and gives you a shot when going against the cash buyers
Pay with cash, but make sure you do it the right way. On a property purchased with cash, you have 90 days after closing to place a mortgage in order to secure a tax deduction. You also must document the source of fund you used to make your purchase to get loan approval after closing.
Consider using lender-paid mortgage insurance. By using lender-paid mortgage insurance, you can take on slightly higher interest rate in exchange for no mortgage insurance. This isn’t as expensive as FHA insurance or Private Mortgage Insurance. That lower monthly payment can help you afford a home with a steeper price tag.