A few important reminders:
I. Homes Need Permanent Heat Sources
Every property needs a permanent heat source to be eligible for financing. Sometimes appraisers don’t notice if there is no heat source (unless there are notes in MLS comments), but FHA appraisers almost always do. “Permanent” means affixed to the property and hardwired (not just plugged in).
A very cheap wall heater from Home Depot will suffice, as long as the specs say it can heat the entire home. Exceptions include unique “typical for the area” heat sources. I have seen underwriters sign off on wood stoves as acceptable heat sources in very remote areas, for example.
II. The Affordability Factor The Media & Crash Bros Ignore
The crash bros love to remind us that high home prices and interest rates are making homes less affordable than ever.
But what they miss is that the same inflation that drove up home prices and rates also drove up incomes for many.
A friend of mine, John Downs, recently mentioned on X that he has a couple who just gave up their 3% rate from 2021 and moved into a larger home because they (1) had more kids and needed more room; (2) wanted better schools; and (3) saw their household income increase by $100,000.
Wages for skilled trades are up 30% since 2022, and they’re up 25% for workers with AI skills – per CNBC.
III. Older Buyer Overwhelmed By Onslaught Of Emails (We All Need To Warn Them)
We recently had a borrower complain that she was absolutely overwhelmed by the number of emails, calls, and texts she received during the purchase process.
It was a relatively fast close, and she was contacted by her lender (us), agent, escrow officer, home inspector, insurance agent, etc.
None of the emails were excessive or out of the ordinary, but they just came very quickly because it was a faster close.
We warn borrowers to expect this when closing periods are 21 days or less, but it would help if agents and escrow officers offered similar warnings.
IV. “Can I Finance Some Furniture Now That Loan Docs Are Drawn?”
We often get questions like that, and our answer is usually – “no, please wait until your loan actually funds…”
This is the case throughout the entire closing period, as all lenders continually monitor credit for inquiries.
And – if someone finances anything during the escrow period (up to the day of funding), lenders will notice.
If debt ratios are very low, it is not a big deal – but it could cause delays because buyers will still have to explain the inquiry.
If debt ratios are tight, though, financing anything can kill a transaction.
