Denver area mortgage experts say that potential homebuyers need to lockdown their financing plans before starting their home search.

When homes sit on the market for only a few days, prospective buyers don’t have a second to waste. They also need to be ready to make a solid offer when they find their dream home.

Here are three options to help you submit a winning bid: Make a cash offer, get TBD underwriting first, or secure down payment assistance.

Cash is king

One option to submit a winning bid is to work with a mortgage company that offers a power buyer program that connects buyers with a third-party company so they can make a cash offer. This gives buyers the ability to make a cash offer with a quick close option, in some cases within 72 hours.

Once the offer is accepted, the buyer pays off the loan by taking out a traditional mortgage.

Another possibility, some mortgage companies offer a program in which the company buys the home for cash and then sells it to the buyer with a traditional mortgage.

According to national statistics, a cash offer is four times more likely to win in a multi-offer situation rather than making an offer with a traditional mortgage.

Offering cash can help make an offer more compelling to sellers, says Bill Goldberg, president of Home Mortgage Alliance.

“Sometimes the competition is razor-thin,” Goldberg says. “If the offers are similar dollarwise, offering cash gives the seller confidence in your offer. They know you’ve been through the approval process, so they’re assured the sale will close and probably close faster.”

If you have an existing home, you could take advantage of its equity to take out a cash loan that you can then use to make an offer. You can pay off the cash loan when your existing home sells. This way, you can make a purchase offer without making it contingent on selling your existing home.

Get the loan first

Another option for prospective homebuyers is TBD underwriting. Using this process, also known as upfront underwriting, you go through underwriting to build a loan before making an offer. With TBD underwriting, you provide bank statements, tax returns, pay stubs, and W-2s at the beginning of the process instead of at the end.

By using TBD underwriting, you know how much you can spend. The loan is ready to go, so you only have to add the purchase price and address when the seller chooses your offer.

Secure down payment assistance

Some Colorado programs help homeowners boost the amount they can use to make a down payment by offering grants to help make the down payment or pay closing costs.

The Colorado Housing and Financing Authority offers grants, home purchase loans, and second mortgage loans. Prospective buyers must qualify for the program by meeting income requirements and having a credit score of 620 or better. They also are required to complete a CHFA-sponsored homebuyer education class.

The Open Hand Initiative Charitable Foundation provides grants of $1,000 to $5,000 to help with the down payment. Prospective buyers must meet several requirements, including a proven on-time rental payment history, 24-month job or school history, and income to satisfy the debt to mortgage ratio underwriting guidelines. Prospective homebuyers also are required to attend homeownership and credit counseling sessions.

Not a fun process

Mortgage experts know securing financing can be tedious. They also know most buyers don’t think about it until late in the home buying process.

“We know this is not fun,” Goldberg says.

But securing your financing early in your home search is critical.

“We work hard to not only qualify buyers but work with listing agents to get our offers accepted,” says Dale Petrillo, Supreme Lending regional branch manager.



The news and editorial staffs of The Denver Post had no role in this post’s preparation.

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