Don’t Miss Out on the Home of Your Dreams—Lock, Before You Shop
Last spring, a young couple was shopping for a home in the Valley. Mortgage rates were at about 3 percent when they started their search. Only a week or so later, they found a home they loved and could afford. Rates had shot up to 4.75 percent—but that was no problem for them.
They used our rate lock with pre-approval program, so the 3 percent rate was available to them for 120 calendar days.
Florence Bank is the only bank in the region that has a pre-approval program with a rate lock, and it can easily mean the difference between buying the home of your dreams or settling for something less.
It’s a huge advantage to lock and shop because a small increase can have massive affects that will dampen your hopes.
Consider the couple who thought to pre-apply and lock the rate. Had they waited, the increase would have added roughly $300 a month to their mortgage payment, thus lowering their purchase power from a home worth $300,000 to one worth about $80,000 less.
That’s a lot less house, and these days, there are few homes in the Valley priced under $250,000.
“Rates can change so much in a short period of time,” explains Toby Daniels, vice president / Hadley branch manager. “That impacts the level of borrowing.”
Susan Seaver, vice president / mortgage loan officer, adds, “The last thing you want is to finally find the perfect place and have your offer accepted only to discover the rates have gone up, and you no longer qualify.”
Susan has had to break the bad news to homebuyers more times than she’d like.
So, what is pre-approval?
For starters, it is different from a pre-qualification, which buyers must have these days to even make an offer on a home. A pre-qualification process is easy and quick; it always benefits the buyer to stop in a bank and complete the process before looking at homes or attending an open house.
With a pre-qualification, the bank will collect information verbally on your income, assets and credit and determine your buying power. In the same day, you could hold a letter that certifies the limit you can spend on a house; it would be submitted by your realtor to a buyer with any offer you made.
Pre-approval takes the process a few steps further—and if you choose the rate lock, it makes the process as safe as it can be. We’ll hold your rate for 120 calendar days, so you’ll need to make sure you can close the deal in that time.
Know that going the pre-approval route takes longer too; securing a pre-approval and rate lock can take a week to 10 days, so make sure you plan ahead.
For a pre-approval, the bank collects information on income, assets and credit score, but documentation is also collected, from check stubs and bank statements to tax returns. The file then goes to the bank’s underwriting department for review. When approved, the bank will issue you a commitment letter that shows what you can afford in a house and the amount of down payment you can make as well.
“It’s good for the borrower,” Toby says. “It’s a very good first step.”
Florence Bank offers both the pre-qualification and pre-approval with rate lock.
At no cost to you, the pre-approval process will not only give you a clear view of your buying power, but it will also make sellers—and real estate agents—take you more seriously. These days, a realtor won’t want to take you on a home-buying expedition if you don’t at least have a pre-qualification; and if you have a pre-approval, they will know you mean business.
A pre-approval also helps make your mortgage process go smoother and faster because you will have already checked off some of the to-do boxes.
If you are not a first-time homebuyer, pre-approval with rate lock could be for you too.
Maybe a shift in rates would not affect your buying power, but an increase will certainly affect the amount of interest you pay over the life of your loan.
And who wants to spend more?
So, whether you are ready to buy a home now or in the near future, let us help you finance the home you picture in your mind. Stop into a branch or call our Customer Service Center at 413-586-1300 to speak to a Mortgage Specialist today.
*Subject to credit approval, pre-approval with 120 calendar day rate lock on a qualifying primary, single-family, owner-occupied residence located in Hampden, Hampshire or Franklin Counties only. To guarantee 120 calendar day rate lock, a qualifying property must be identified and mortgage application submitted by the 75th calendar day from the date of the rate lock agreement. Only available on certain mortgage products. Contact for more details.