When you buy a property in Ocean City, Maryland, how does financing work? Let’s say that you have been pre-approved and already submitted an offer along with your pre-approval letter. Is that enough? What else do you need to consider?
Ryan Haley, broker and owner of Atlantic Shores Sotheby’s International Realty, talks about how financing works and what you can do to get added protection.
Once you’re pre-approved for a loan, it means that the lender has looked at you and your finances. But at the Ocean City real estate market, there are other things to consider. In this market, we usually have condo association fees and homeowner’s associations.
Thus, not only does the lender has to approve you, but they also need to approve the condo and homeowner’s association. We need these to get the financing and mortgage to purchase the property.
This is where the added protection of a financing contingency comes in. What the financing contingency will outline are the days after contract acceptance to apply for a loan and the days in which you will obtain conditional approval.
It could be that within five days of contract acceptance, you will have applied for the loan. At times it takes about 30 to 45 days after contract acceptance for you to get conditional approval for the loan.
Financing will also take into account the amount of downpayment you will be paying, i.e., if you put 20% downpayment, the lender will be financing 80% of the purchase. How much downpayment is required to buy a home? Find out more here.
Another item that will be taken into account is the maximum interest rate that you are willing to accept.
The length of the mortgage will also be considered—this could be a 5-year mortgage which we don’t see very often anymore, or it could be a 15-year or a 30-year mortgage. The other item to consider is the amortization period, which could be 20 years or 30 years. All of these items will be put in the financing contingency.
If you still have any other questions, please give us a call, and we’ll be happy to answer them for you.