Congratulations. You have worked hard and are ready to make the move into the luxury real estate market. The same general rules of purchasing a home will apply, just as they always have, but there are some differences you should consider.
Starting the mortgage process early is always the best first step, and one that many luxury buyers skip. They have plenty of money and good credit, so the question of financing is often never raised. Yet, for the luxury buyer, it is often more important to start this process early. Finances in this realm tend to be more complex. Due to the larger liability on these purchases, lenders, underwriters, and home sellers look at potential purchasers with more scrutiny.
In this post-recession climate, lenders want copies of everything, from bank statements to retirement account information, and anything else that might speak to your borrowing power. Do not be surprised if the lender asks for documents, then asks for even more documents after reviewing the first set. If your income involves bonuses or commission, the lender will want to see two years of records to show income to be consistent. Getting this process underway before you find a property and make an offer will result in a much smoother process, and much less stress for you and your agent.
Home sellers may require proof of ability to purchase prior to allowing you to view their homes. Many luxury homes contain valuable items and may be owned by celebrities. Luxury homeowners may want to be protected from potential threats to their security. Proof of ability to purchase, such as a pre-approval letter, provides luxury homeowners a sense of security, and may give you the added benefit of enhancing your negotiation power. Ready, willing, and pre-approved buyers are always more attractive.
By Hilary Broadway (Branch Leader, Mooresville Office) – Guest Blogger