South Bend Home Loan

Friday, April 29, 2016

How To Make Your Offer Better

In my thirteen years of mortgage lending, I've never seen the market balanced. The number of buyers and sellers is always lopsided with someone having an advantage.

Any active home buyer will tell you that the seller is currently on the winning side of that equation. There are more buyers out their than good homes so the attractive properties are selling fast, often with multiple offers.

This can really stink for buyers. They find a house they like only to find out other buyers want it too. So what can they do? Can they somehow make their offer look better than the other guy's offer?

Absolutely! There are certain small differences that can have a big impact on the seller's decision to pick one offer over the other. Let me share three important ones here:

Go Conventional

Conventional mortgages and FHA mortgages are the two most common loan types used today. Many buyers use FHA financing because it offers more flexibility with the loan approval. Credit scores can be lower, the down payment can sometimes be lower, bills can be higher compared to income, etc.

FHA is a logical choice for many buyers, but it can make some sellers nervous. FHA financing requires a higher property standard which could mean that some repairs are required for a FHA buyer that wouldn't be required for a conventional buyer.

Because of it's flexibility, FHA financing also sometimes has the reputation of being used by 'less solid' buyers. That is not the case at all - a FHA buyer is just as able to close on a mortgage loan as a conventional buyer - but perception matters and some sellers view FHA offers as weaker than conventional offers.

So what can you do to make your offer look better in a multiple offer scenario? Talk to you lender and see if you can go conventional. While FHA may have made the most sense for you when you did your initial loan application, you may also have a conventional option. There are now several 3% down conventional loan options available and the requirements for credit score, savings and debt/income ratio continue to soften, so a conventional option might be available to you if needed.

(If you'd like to learn more about the 3% down conventional options, go here - The Best Mortgage Loan You've Never Heard Of)

Remove Seller Concessions

It's common for buyers to ask sellers to contribute to the buyer's loan costs. When you are up against multiple offers, though, asking for seller assistance can put you out of the running. Even if the net amount to the seller is the same (or sometimes even better) the impression given with seller concessions is that you don't have enough money to buy the house without help. That can make a seller nervous so they may go with a different buyer.

But what if you really don't have enough money to buy the house without help? In a competitive offer situation, you may want to look for help from another source. Do you have a family member that might gift you the money needed for closing costs? Do you have a 401k that you could take a loan against? A vehicle you own outright that you could borrow against?

Or does your lender have an option to charge you a higher interest rate and waive some of the loan costs? That's not always an option but it often is. In a competitive situation, you'll want to explore all options to help your offer be strong.

(LENDER SIDE NOTE - if you choose to try any of these options, talk to your lender before making the offer.  Adding gift funds in or a new loan can change your approval status. Be safe. Talk to the lender first.)

Use a Trusted Local Lender

I can see how me telling you to use a local lender may seem self-serving. I am a local lender, after all, so of course I'd say to go local, right? The truth of it is, though, going local really can make a difference. Even if the seller doesn't have a preference, odds are good that their Realtor does. The seller's Realtor has worked with the Internet banks before and they have worked with many of the mortgage lenders in town and they have opinions of who is good and who is not. The seller will likely take their Realtors advice into consideration when deciding who to go with.

Now, don't get me wrong. All Internet lenders are not bad. All local lenders are not good.  People are people and there are strong and weak ones on both sides. There are local lenders though that have a strong reputation in the market for getting things to closing on time and with little drama. If your offer comes with a preapproval letter from one of those lenders, that can go a long way in helping your offer stand out from the rest.

And is Ruoff Home Mortgage one of those well-respected, low-drama, get it done lenders? You bet we are. But don't just trust me, ask around. Check with your Realtor. Read the online reviews (Zillow Review for Lori Hiscock).  Talk to us and judge for yourself.

So...there you go. If you want your offer to be stronger than the other guys, these options could help. If you'd like to explore them deeper and get that 'well respected local lender' advantage, email me at Good luck with your home shopping!

To learn more about the products covered here or any other aspects of home financing, contact Lori Hiscock at  
Lori Hiscock is a Sr. Loan Officer at Ruoff Home Mortgage‘s South Bend office.  One of Michiana’s top mortgage loan officers, Lori started her lending career in 1995 after obtaining her bachelor’s degree in Finance from Western Michigan University.  You can connect with Lori Hiscock or apply online here. NMLS#404320.
Ruoff Mortgage Company, Inc. is an Indiana corporation licensed by the Indiana Department of Financial Institutions (DFI) and operates with the following licenses:

Indiana-DFI First Lien Mortgage Lending License #10994;
IL Residential Mortgage Licensee #MB.6760734;
Michigan 1st Mortgage Broker/Lender License #FL0017496.
Ohio Mortgage Broker Act License #MBMB.850220.000

The Florida Office of Financial Regulation License #MLD1182