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At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our mortgage reporters and editors focus on the points consumers care about most — the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more — so you can feel confident when you make decisions as a homebuyer and a homeowner. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Homebuyers are doing all kinds of things to make their offers stand out in this t, from to the asking price. One tried-and-true technique for making a competitive offer on a house remains popular as well, and that’s the all-cash purchase. Now here’s a little secret. Believe it or not, savvy homebuyers can essentially make a cash offer even if they’re planning to take out a mortgage. You just need to find the right lender to help you get everything in order. What is an all-cash offer anyway
First, the basics. A is (usually) exactly what it sounds like: It means the buyer plans to pay all-cash for the home she has put an offer on, and can prove she has the funds in the bank to do it. Cash offers usually mean a more streamlined process for both buyers and sellers, and many sellers prefer to take unfinanced cash when it’s an option. Buyers who plan to take out a mortgage, however, represent more risks to the seller. “They’re taking the house off the market because it’s now under contract, therefore they lose a potential two weeks if the buyer doesn’t get approved,” said Jaad Nicholas, senior mortgage banker at Ameris Bank, and vice chairman of the mortgage committee for the Asian Real Estate Association of America. The less involved in a real estate deal, the more favorable a seller’s view of the offer will usually be, he added. “What’s happening in this market is sellers are basically running the market because there are so many buyers and not enough homes to purchase. The sellers are starting to take the cash offers,” Nicholas said. “They’re taking those and they’re putting them at the top.” How can you compete with cash if you still need a mortgage
While it’s true that sellers often prefer all-cash offers, it doesn’t necessarily mean you can’t compete in this frenzied market even if you still need a mortgage. “There are some ways you can use a loan and still be considered a cash offer,” Nicholas said. “The most common way, what we offer at Ameris Bank, is a decision-now approval.” It’s not exactly the same as cash, but it’s almost as good because a decision-now approval, also sometimes called an underwritten or upfront underwriting, means the loan has already been funded and the lender verified that the remaining portion of the sale price is accounted for. That means the buyer can more comfortably remove financing from her offer without worrying about losing her earnest money deposit, because her mortgage is already secure. Decision-now mortgages help streamline the closing process and can also make nontraditional homebuyers more attractive candidates in a sale. “It takes someone who may have been risky and it turns them into a super-strong buyer. For example, I did one for a client who just graduated college and has only been working for a year,” Nicholas said. “It took someone who would have been an iffy client and turned them into someone almost as good as a cash buyer.” Because not all lenders offer decision-now mortgage approvals, shopping around is even more important if you think it could be the right product for you. Aside from Ameris Bank, many lenders offer upfront underwriting, but larger institutions like Chase or Wells Fargo tend to favor the traditional mortgage application process, because underwritten preapprovals can clog their already-busy pipelines. A should be able to help you find the right lender for whatever loan products you’re looking for. Tips for buying a house in a seller s market
If you’re ready to buy a house and are worried about the competition, there are a few strategies that could help you along the way. First, Nicholas said, it’s a good idea to work with a trusted Realtor and mortgage lender who can make sure you’re getting the best deal. “The number one piece of advice I would have is get preapproved with a trusted mortgage professional, and number two, make sure you’re partnered with the right buyer’s agent,” he said. “If they have the right team, they’ll get under contract quickly.” You can also check out Bankrate’s . The top strategies include: Being ready to move fast when you find a house you love Going through the full underwriting process before you make your offer Making sure your offer is aggressive enough to stand out — but not too expensive for you to afford Tips for financing your home purchase
Whether you get a decision-now mortgage approval or go through a more traditional contingent loan application, the process is more or less the same. Here are the 10 to buying a house with a mortgage — and remember, in a competitive market, it’s a good idea to get your loan secured as early in the process as possible. Strengthen your credit Know what you can afford Build your savings Choose the right mortgage Find a mortgage lender Get preapproved for a loan Begin house hunting Submit your loan application Wait out the underwriting process Close on your new home Bottom line
A competitive housing market means buyers need to be especially savvy and use whatever advantages they can to close the deal on their new homes. One way of doing that is to make an all-cash offer, which you can still do with a mortgage if it’s underwritten in advance. Learn more
SHARE: Zach Wichter is a former mortgage reporter at Bankrate. He previously worked on the Business desk at The New York Times where he won a Loeb Award for breaking news, and covered aviation for The Points Guy. Related Articles