How to Keep Cool in a Hot Mortgage Market

How to Keep Cool in a Hot Mortgage Market

It’s hot out there in the housing market.

New construction and current inventory are low. Demand is high following the safer-at-home orders of 2020, due in part to the transition of many jobs to a virtual office environment. Buyers outnumber sellers, and many are making cash offers, sometimes even above the asking price--and prices are skyrocketing. The National Association of Realtors (NAR) data shows house prices are rising at the fastest pace since 2006.

As a prospective buyer, how can you keep a cool head and succeed in this harried housing pursuit?

  1. Preparation, preparation, preparation. Be ready on two fronts: location and loans.

    • Location: Know your desired neighborhood(s) forward and backward. Find out the “comps” (comparables: the price-per-square foot of recent home sales in the area), the average number of days houses are staying on the market, the zoned schools, the drive time to and from work, and any homeowner association dues or required flood insurance, etc.

    • Loans: Run the numbers and be realistic as to what you can afford, taking into account taxes, insurance, repairs and energy costs. You’re making a big investment, so make sure you’ll be there long enough to accumulate some equity1. A minimum of five years is a general rule of thumb.

      • Get your finances in order. Pull your credit report and clear up any blemishes, and get your debt-to-income ratio under 36 percent.

      • Get prequalified. During this process, you can get a feel for whether your banker is attentive, with the experience and accessibility you need for this fast-paced market.

      • Find all the documents that can be located ahead of time to make your loan process go quickly once your offer is accepted.
  1. Look at local ties when choosing a lender and real estate agent. Successful agents know successful lenders, and when they see an offer with a loan officer they’ve worked well with in the past, it makes a positive impression. Professionals with local relationships likely know excellent contractors, staging companies or inspectors who might play a supporting role, whether with the home you hope to buy or getting your existing home ready to sell.

  2. Decide what percentage you’ll put down as an earnest money deposit. Ask your lender or agent the average deposits they’ve seen in the neighborhood.

  3. Get on the same page with your realtor on your offer terms. Discuss options for sweetening your offers outside of paying more than asking price. The best offer isn’t always the highest. Most sellers have an ideal timeline in mind. If you’re not on one, make sure your realtor knows you’d be open to accommodating the seller.

  4. Make sure your offer is complete. If your offer is missing relevant disclosures, forms or information, it may end up in the trash.

  5. Be prepared for hiccups and remind yourself that your first offer (and first acceptance) doesn’t have to be your last. If an offer or a deal falls through, you’re that much more prepared for the next one. It gets easier.

Tate Gibbons is a mortgage advisor at Pinnacle Financial Partners in Mt. Pleasant, SC. He can be reached at (843) 216-3010 or [email protected] All loans are subject to credit approval. Ask for details.


1 Equity is the difference between how much you still owe on your home and what your home is worth. Your equity can increase in two ways: A portion of each mortgage payment goes toward the principal and the rest to interest. The longer you continue to pay, the portion of each payment that goes to principal rises (and the portion to interest falls), causing an accumulation of equity in your home. Your equity will also increase if the value of your home increases.

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