What Motivations are Determining
your Home Purchase and Financing?
During conversations with my new mortgage applicants, I try to discern what their "motivation" is for purchasing a home ...
Is the motivating factor ... the stimulus to buy and finance ... obvious or unclear? Is it based on need, fact, or emotion?
Why is that important? It helps me guide them and service their needs as their Originator. But more importantly, Mortgage Underwriters think it is ... and here's why.
Depending on a Buyer's motivation, the following things (and options) can vary or change within a mortgage:
- Loan Terms
- Underwriting Guidelines
- Interest Rates
- Down Payment Requirements
As a result of this underwriting fact, my conversations with my clients must include fact-finding. (No, I'm not just being nosy.)
So, what are some of the questions I'll ask my clients?
- Will they be occupying the property they buy?
- Are they buying the property for a family member?
- Will that family member also be on the loan?
- Will the purchased property be an investment?
- Have they already viewed homes?
- If so, do they have a specific home in mind?
- And More ...
Again, why do the answers they provide matter? The financing options available to them will be based on their replies and final choices.
If a Buyer isn't moving into the purchased property for their primary residence, the property is then considered a 2nd Home/Vacation Property ... or an Investment Property (AKA Non-Owner-Occupied Loans).
The down payment requirements for each (2nd Home/Vacation Property and Investment Property) are different than those required for a Primary Residence. The down payment for these types of purchases can be as much as 20% or more (Note: In some cases, a 15% down payment is allowed. Contact me for details).
It's also a fact: FHA Loans are NOT available for Investment Properties, so these types of loans are financed via Conventional Financing Programs/Options only.
Something is always motivating the purchase. In the case of first-time home buyers or even step-up buyers, the motivation is typically pretty clear-cut.
But beyond the more typical/major motivations, there can lie many secondary motivations. While we know there can be many varied, emotional, and personal reasons behind home purchases, one of the most common denominators mentioned (besides affordability in payments) is: Locale.
Factors that influence a choice of locale are:
- Proximity to Employment
- Proximity to Family
- Real Estate Taxes
- Quality of School Districts/Schools
- Proximity to Public Transportation, Highways, etc.
- Proximity to Services: Hospitals, Doctors, Stores, etc.
- Proximity to Entertainment, Places of Worship, More
(It's been my experience that the quality of schools districts and the commuting distance to employment are most commonly mentioned by my clients. Click on each, if seeking info regarding Lincoln-Way Area Communities, Will County, DuPage, or Cook/Chicagoland communities, services, schools, more.)
While most new applicants think mortgages are one large math equation or an act of gathering documentation ... there is much of the "ABC's", the elementary basics of a mortgage, that is based on the motivations mentioned above.
And that is why I spend so much time as a Mortgage Originator asking questions and gathering facts during the Pre-Approval phase of my mortgage service and during the processing of an Application. Much rides on the answers I receive.
As an example: Let's consider Real Estate Taxes ... as even during the Pre-Approval stage of obtaining a mortgage, they are vitally important and can prove "motivational" within a purchase.
In this example, my Buyer has been viewing homes with their agent. They have narrowed their choice of homes down to 2 properties.
What is known:
- Home #1 and Home #2 have the same Sales Price
- Home #1 and Home #2 don't share similar real estate taxes
- Home #2 has a notably larger annual real estate tax bill
As a result:
- Home #1, if chosen, would possess a monthly tax escrow account payment lower than a purchase of Home #2 would
- Obviously, the Buyer must qualify for the monthly payment associated with either home.
But because Home #2 has a higher tax bill, they would have to qualify for a higher dollar amount (in comparison to Home #1) in order to purchase that home.
As a result, real estate taxes often become a "motivation" and determinate regarding which home to purchase ... or what options remain available during financing.
Motivations, whether large or small, do drive most home purchases and mortgage processes. The motivations determine options considered and choices made throughout the entire process.
Finding and working with a real estate and mortgage professional that can assist you in discovering your personal motivations ... those things you find of value in a locale, your choice of home, financing that is a sound comfortable fit for you ... is crucial.
What Motivations are determining your home purchase and financing? Knowing them is the key to finding success when you purchase and finance any IL/Chicagoland home ...
When in need of mortgage information, guidance, and service in New Lenox, Will County, and elsewhere in the Chicagoland/IL/WI area, please contact me. I'll be happy to put my 40+ years of experience and expertise hard to work on your behalf.
I'm easily found at:
Mortgage Originator - NMLS #216987 - IL Lic. #031.0006220 - WI Licensed
American Portfolio Mortgage Corp.
Click Here for: Testimonials
Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking:
Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago
and the greater Chicagoland region, including:
The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena,
Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook,
Romeoville, Naperville, etc.), DuPage County, the City of Chicago,
Cook County, and elsewhere within IL & WI.
Referrals are Appreciated and Welcomed