Mortgage 101

When to Apply For a Mortgage

By Jessica Brita-Segyde on July, 30 2020
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Jessica Brita-Segyde

Time is of the essence. This saying is extra-true for real estate transactions. In today’s market, buyers should be ready to make an offer fast. Homes are receiving multiple offers within days or hours of being listed. 

This type of fast-sale environment is often called a “seller’s market.” If you’re feeling overwhelmed at the thought of buying a house in such a fast-moving market, don’t fret. Read on for answers to some common questions related to timing.

When should I apply for a mortgage?

The time to apply for a mortgage is before you start looking for a house. Pre-qualification is nearly essential to making a serious offer these days, so don’t get caught without an approval letter! Think about it…if you were selling a home, would you be more likely to work with buyers who can guarantee that they’ve been pre-approved for a mortgage or would you settle for buyers who are pretty sure that they can probably get a mortgage? Most sellers would choose the former, so be ready to write a strong offer backed by a pre-approval from a mortgage lender like Ruoff.

How do I start a mortgage application?

The quickest way to start is online. You can begin a mortgage application right now at Click on “Get Started.” You’ll be prompted with a few simple questions so the Ruoff website can pair you with the right loan application. You’ll be asked to create an account so you can start and stop your application at your convenience.

If you’d prefer to speak to a loan officer over the phone and/or in person, click here to search for someone in your area.

How long does a prequalification last?

In essence, your prequalification lasts as long as your application details don’t change. Items on your application that could be subject to change are your income, credit score, and savings. You may be asked for updated documentation if some time has elapsed between the date of your prequalification and the date you request a pre-approval letter from your lender. (You will probably request a pre-approval letter when you write an offer on a house.)

If you have locked an interest rate, your loan officer can advise as to the length of your lock (usually 30 or 45 days). Longer locks will require a fee. Some borrowers choose to float their interest rate if they think a lower rate could become available in the weeks prior to their planned closing date.

How long will we be in a sellers’ market?

This is a question no one can answer with complete certainty. However, there are market indicators that can help loan officers and other real estate professionals plan for future trends. The United States Federal Reserve meets eight times per year to assess and adjust a benchmark figure called the federal funds rate. As of the date of this blog, the federal funds rate is very low at under one percent, thus driving mortgage rates to historical lows.

This low interest rate environment has encouraged many people to purchase homes, leading to an increase in demand. More demand equals higher prices. Conversely, an increase in supply should drive down price, but real estate is a unique product with a long production time. There are no “house factories” for stick-built homes. A typical single-family home takes around nine months to build and homes usually built after they’re purchased. Even speculative builders typically construct and hold just a few unsold properties in their inventory. Translation: America’s supply of houses is not likely to outpace demand any time soon.

Plus, the millennial population (folks in their early twenties to mid-thirties) is a substantially large cohort with buying power. According to the Pew Research Center, millennials now make up the largest living generation. The National Association of Realtors reports that many households from said demographic are now purchasing instead of renting. This all adds up to a sellers’ market with staying power. The take-away here is if you want to buy a home, don’t wait for prices to come down. They probably won’t. In fact, waiting could prove problematic if the Federal Reserve raises interest rates while supply continues to dwindle. The majority of prospective buyers are well-advised to begin the application process ASAP to take advantage of lower rates in before home prices increase further.