HOT, HOT, HOT!

I was going to come up with some clever analogy or cute pun, but instead, I’m coming right out and saying it—it’s HOT out there! It’s so hot, I saw a bird pull a worm out of the ground using an oven mitt. It’s so hot, I learned that asphalt has a liquid state. It’s so hot, I’ve heard a lot of credit union members say that their new dream home needs to be in Alaska!

Okay, so I am still trying to get the hang of Earthling humor, and it’s trickier than it looks. I got a little cutesy… and for those members wanting to buy a home in Alaska, I wish we could help, but that is one of the only three states where myCUmortgage doesn’t do business. But, I’m sure we can help you find a place with a walk-in deep freeze elsewhere in the country.

I think the toasty climate we’re experiencing could be a by-product of the hot real estate market. Sure, that may be a stretch, but homes sales continue to melt the records as our credit unions help more and more members with home ownership. And right now, it looks to be a long, hot summer, so what can you do to make sure your members don’t get burnt while shopping for a home?

You can begin by cooling them down with a little peace of mind by encouraging them to get a pre-approval for their mortgage loan. Be sure you explain what a pre-approval is all about because it could seem a little intimidating to those who have never purchased a home to qualify for a mortgage (remember, we live mortgages day-in and day-out; they don’t). After all, you wouldn’t start a long journey to a distant galaxy without completing a pre-flight checklist and fueling up; you wouldn’t make it any farther than Mars!

Explain to prospective home owners that a pre-approval is a statement that your credit union is willing to lend to them for a mortgage. While the process may vary from CU to CU—particularly as we all adapt to new ways of doing business as a result of the COVID-19 pandemic—it generally results in an application being completed, credit being checked and a letter being issued to the member stating that the CU has a conditional commitment to lend to them. Make sure they understand that this isn’t a loan approval but rather a statement of confidence that the CU is willing to lend to them.

You’ll also want to outline a few of the key reasons why getting pre-approved is so important:

• Peace of Mind: While I mentioned this already, it bears restating. Shopping for a new home is exciting for your members, but it can also be very stressful. A pre-approval can alleviate some of that stress by giving them a solid idea of how much of a house they can afford. Instead of worrying so much about finances, they can channel that energy into things like identifying a neighborhood that is a good fit for their family and making sure there is sufficient room on the property to land a moderate-sized interstellar vehicle.
• Competitive Advantage: Shopping for a home is only the start for your members—getting their offer accepted by a seller is of greater importance. In today’s seller’s market, which is even tighter because many sellers don’t want to enter the market during the pandemic, we know that there is a lower inventory of homes which enables the sellers to be selective on which offer they accept. If your member has a pre-approval in hand, that speaks volumes to the seller and gives them a competitive advantage over buyers who are not pre-approved. It ultimately could be one of the deciding factors in the seller accepting your member’s offer over another.
• What’s Affordable: As I mentioned above, a pre-approval helps put some structure around how much house your member can afford. This will save them and their real estate professional a lot of time during the home search, as they can conduct more definitive searches of available homes that fall within their price range.
• Poised for Negotiation: By being pre-approved for a mortgage loan, your member is more confident when making an offer and can actually be more assertive with what they want included in the offer. For example, do they like the ceiling fan in the master bedroom with the blades shaped like palm leaves? They can ask for it in the offer! This confidence is further enhanced by their knowledge that there aren’t any credit surprises looming. That’s what being pre-approved is all about.

Once your member is pre-approved, you’ll want to look at next steps with them and review what they need to do (or not do) in order to maintain their pre-approval. We’ll take a look at all of these in my next two posts. In the meantime, remember:

Members with pre-approved mortgage loans are HOT! Neglecting to get pre-approved is NOT!

Stay cool, and keep your members chill with those pre-approvals.