If I like it, I clip it…  Here’s some goodies from my favorite web sources and publications.  Let me know what you think.  Also, let me know if you find some good articles so I can pass them along here.         

Be Careful with Those Buyer  Prequalification Letters  by Tim Brown, Academy Residential Mortgage

Having done hundreds of prequalification letters over the last 7 years, I recently came to the startling realization that providing a letter that says a buyer qualifies to purchase a home of up to a certain price point may not be entirely accurate in today’s real estate environment.

Since it seems half the buyers I work with are making offers on foreclosed or short-listed properties, the taxes and association dues are almost always out of alignment with the property’s current list price.  With foreclosures you have the double whammy of a property tax rate based on the previously assessed home value plus the absence of homestead exemption because the property was empty at the start of the year.  The problem is even worse with condominiums where association dues are also out of alignment. I had a recent closing where a $145,000 condo purchase (2006 sale price of $265,000) had monthly payments of $310 for taxes and $175 in association dues.  When providing the prequalification letter for this buyer, I had assumed much lower taxes and dues. Luckily the buyer was strong enough to qualify at the higher payment this home would require.

The important take away is for agents to confirm their buyer’s qualification at the inflated tax and association dues rates in today’s market particularly with the current difficult lending environment.  I would recommend you email or text your loan officer with the actual tax and association dues information for each property on which you intend to make an offer to confirm your buyer’s qualifications.              Tim Brown, Academy Residential Mortgage