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Financing Today – New Loans vs. Refinancing

Have you tried to get a loan recently? As in, the last six months?

Well, with rates so low many buyers who are trying to enter the market are eager to get approved for financing. The problem is that most of the current lending market is reserved for refinancing – not new loans. Buyers are being affected all over New York City, stunned that with their stellar credit and great job history that they cannot capitalize on the low rates with a new home loan. If you are looking for a new home with financing, here are some tips:

1. When you identify a property you are interested in purchasing, find out when the last purchase in the building occurred and what financial institution financed that deal. You will most likely find your best loan options (and the most reliable bank to take you to closing) will be the one that has closed a loan in the building in the last 6 months.

2. Recognize that the bank(s) that will loan in the building you are interested in will not necessarily offer you the lowest rate. Every building in New York has different financials, operating budgets, taxes and debts. The banks are cracking down on who they will lend to and who they will not. Just because “X” Bank agreed to pre-approve you at 4.5%, they need to approve the building – and depending on the building, your rate may be affected.

3. Before you go to contract, make sure you can get a loan on the property and building you are pursuing. The bank should be able to tell you if they will loan in that building. If that is information you cannot find out, make sure you have a mortgage financing contingency in the contract!