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From Pre-Approvals to Appraisals: A Mortgage Broker's Advice for Today's Sellers Market

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Lori Auerbach and Julie Vanderblue sat down with David Garofalo of Guaranteed Rate
Affinity to discuss how we can help buyers, sellers and real estate investors
understand the nuances of today’s mortgage climate. 

JULIE: Now, more than ever, Fairfield County is attracting buyers from all over the
country but particularly New York Metro area. In fact, in my 25 years of real estate, the
demand for privacy & space is higher than I have ever seen. Many of our sellers are
looking to purchase their new home. What can you share to help buyers position
themselves in the strongest way possible?

DAVID:  The first step is always to get pre-approved by a lender. The earlier this is
done, the better.  You want to make sure you have the time to fix any unforeseen issues
or challenges that you may have.   A good lender will verify all of your income, assets
and credit before issuing a “pre-approval”. This is different from a “pre-qualification”
which does not verify your income and assets.

 LORI: With the high demand and low inventory, we are finding many buyers are
offering over asking price. This can be an issue because appraisal may come in lower.
Do you have advice or options on how to handle such situations? 
DAVID:  This can sometimes be an issue if the prices are appreciating quickly.   There’s
always a potential risk of a house not appraising but that doesn’t mean you still can’t
buy it.   If the house comes in low, the buyer does have the option to pay the difference
of the appraisal and the purchase price or borrow at a higher loan to value ratio.   My
suggestion is for the borrower and Realtors to be prepared to rebuttal a low appraisal if
they feel the value is there.  Most appraisers are very reasonable in taking the realtors
data into consideration. 
JULIE: Do you have any unique loan opportunities for downsizers?
DAVID:  There are not any specific loans for people looking to downsize, but I often do
suggest speaking with a financial advisor.   When they downsize, many people choose
to buy their new home with the proceeds of the home they are downsizing from, without
taking out a mortgage.  This does sometimes make sense, but with mortgage rates right
now under 3%, it's definitely worth looking into putting less money into the home
purchase, leaving the chance to invest more money in another financial vehicle.   

LORI: Would you ever recommend refinancing prior to selling? Or taking out a home
equity loan to do improvements?  
DAVID: This does sometimes make sense for certain situations.   Some borrowers will
refinance prior to purchasing a new home to lower your payment or pay off debts. Other

times a new loan could be used to take cash out and put toward a down payment.   An
equity line can accomplish this as well.  
JULIE: If you had one piece of advice to offer buyers or sellers, what would it be? 
DAVID:  Honestly to work with a professional team that works together. Deals fall apart
due to lack of communications so having a network, like AIRE, All Inclusive Real Estate,
where the buyer, the realtor, the insurance agent, the mortgage broker, and any home
service providers are all communicating to create a seamless transaction is very

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