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Home Buying and Refinancing

Navigating a competitive housing market

Navigating a Competitive Housing Market

In the current homebuying climate, competition is fierce

In today’s seller’s market with interest rates on the rise, you may be hesitant to jump into the house hunt. And it’s always a good idea to weigh the pros and cons of purchasing in any market. But homebuying can’t always wait. So, if you want or need to buy a house right now, we want to help. We’ve outlined the best tools, resources and ideas to help you make the smartest choices for your finances and stand out to buyers, so you can land the home you want.


Be prepared

Always begin the home search by arming yourself with information. Here are some guidelines to get you started:


Understand what you can afford1

It will be nearly impossible to be taken seriously by sellers without loan pre-approval (unless you’re planning to make an all-cash offer). A mortgage pre-approval is a document from an approved lender that shows sellers what you are able to spend on a home. According to Bankrate, “In today’s housing market,…there are simply too many buyers for sellers to be willing to take a chance on one who hasn’t at least talked to a lender about getting a mortgage.”1 So, start your search by talking to a lender you trust and finding out what you’ll be able to spend on a home.


Know the difference between pre-qualification and pre-approval

Pre-qualification is used to estimate what you may be able to spend on a home based on the information you provide to your lender, including income, debts and a general overview of your finances. However, not until your lender runs a hard credit check on your finances will you be pre-approved. Pre-approval is the verified amount that you are able to spend based on your lender’s assessment of your credit score, creditworthiness and credit report. In other words, it’s a fact-based verification of your pre-qualification.1,2


Keep in mind that pre-approval lasts only 90 days

A credit score varies based on any number of factors and can change from week to week or month to month depending on whether you’ve paid off or accrued more debt, had a higher number of hard credit inquiries into your finances or made a late payment, among other factors. Because credit scores do tend to change, your pre-approval amount will only be good for about 90 days, depending on your lender. Given how competitive the current market is, you might have to ask your lender to renew your pre-approval if you don’t find a home within the allotted 90 days. A new pre-approval may require another credit check.3


Choose a mortgage that’s right for you 

Ready to buy? Meet with a Flagstar loan expert to determine the best mortgage plan for your needs. We can help you weigh the costs and benefits associated with each product option. Start by familiarizing yourself with these mortgage basics. 


Explore our calculators

Mortgages are not one-size-fits-all, and we offer a wide variety of options. One good way to determine the type of loan for your needs is by experimenting with our Mortgage Calculators, which can help break down the different financial aspects of buying a new home. These easy-to-use mortgage tools can help you understand what you can afford and answer important questions, including:


  • How much will my mortgage payments be?
  • How much will my ARM payments be?
  • How much should I put toward my down payment?
  • Which is right for me: a 15- or 30-year mortgage?
    Know the two most common types of loan options

    Fixed-rate mortgage

    A fixed-rate mortgage means your interest rate will remain the same for the life of your loan, so you can count on the same principal and interest payments every month. Note, however, as Bankrate points out, “…Your mortgage payments can fluctuate as your property taxes or homeowner’s insurance change over time, because those costs are usually wrapped into your loan payments in escrow.”4 Fixed-rate mortgages are predictable, which makes them a great option for borrowers on a fixed income, those who don’t want to worry about interest-rate changes or anyone who likes the security of a steady monthly payment. Learn more about them here.


    Adjustable-rate mortgage

    An adjustable-rate mortgage (ARM) will typically offer a lower initial interest rate during the introductory period of your loan. Because interest has been on the rise, ARMs have become increasingly attractive to buyers looking to find lower rates. But while ARM interest rates start out lower, they can increase significantly, based on the index to which they’re tied.4 ARMs are generally preferred by buyers who don’t plan to stay in their homes for a significant period of time (more than five years), borrowers who are unable to qualify for lower fixed rates or those who can handle fluctuating payments. Read more about ARMs here.


    Make your offers stand out

    If your financing is in place and you know how much you’re ready to spend, it’s time to start the house hunt. Here are some ways to help set your offer apart in a competitive market.

    Work with your real-estate agent to find listings early or off-market

    Many sellers start the bidding process by listing their property only with real-estate professionals and not to the market at large. This allows sellers an element of privacy from posting their address to the general public, gives them the ability to test the waters before publicly listing their home and may help them avoid the hassle of staging and prepping their home for tours, if they’re able to make a quick sale. Consider working with your agent to access these listings, as they may give you a competitive edge over other buyers who don’t know to ask about them.5


    You can also find listings early by networking online with people who live in your favorite neighborhoods. Contact homeowners’ associations to stay on top of early listings. You can use Facebook or Nextdoor to keep tabs on any homes that may be going on the market before too many other buyers hear about them.6


    Tell everyone you know that you’re on the house hunt: let your friends, family and colleagues know you’re looking to buy so they can keep you posted about anyone who might be selling.5


    Save cash for appraisal gaps

    An appraisal gap happens when your mortgage lender’s appraisal determines that the home you’ve made an offer on isn’t worth what you’ve agreed to pay. The best way to avoid an appraisal gap is by hiring a savvy agent who knows how to pull comparable homes on the market and gauge what you could expect the appraisal to be.7


    But you have options when faced with an appraisal gap. You can attempt to negotiate with the seller to bring the purchase cost closer to the appraisal value. Or you could walk away from the deal, if you have an appraisal contingency in your purchase contract. But in a competitive market, you may very well want to purchase the home anyway. In this case, if you’re able to, consider paying cash for the difference between the home’s value and your seller’s asking price, so you can still get the home you want.7


    Make unique offers

    If you’re ready to get creative with your offers and stand out to sellers, ask your real-estate agent to work with the seller’s agent to find out what the seller needs in an offer. Your agent can be an invaluable resource in helping you with one—or all—of these options:


    Consider waiving the appraisal contingency. 

    Yes, it could mean a bigger investment than the home is technically worth, but it will likely streamline the process for both you and the seller and make your offer more appealing.8,9


    Offer to waive inspection.

    Sellers will appreciate the chance to avoid making big repairs on their home and might just choose you over other buyers who demand it. It could mean a bigger investment from you in due time, but if it’s your dream home and checks most of your boxes, it might be worth it anyway.


    Create an emotional connection.

    Consider adding a personal touch to your monetary offer. For instance, offer $350,000.85 if your wedding date falls on August 5.8 But avoid writing the seller a personal letter, as it violates the Fair Housing Act.


    Start with your best offer.

    This is not the time to haggle over things that don’t matter or grossly underbid on the value of the home you want. Make an offer that respects the seller’s time and is commensurate with what you’re truly willing to spend on the house.10


    Cash is king.

    A cash offer alerts sellers that you won’t be waiting for loan approval and can get to close faster. The more cash you can offer the seller, the more likely they are to accept your offer.10


    We want you to land the house of your dreams. And we’re always here to help you on the road to homeownership. Reach out to us anytime, and we’ll point you in the right direction. 

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    Home loan basics

    If you're considering buying a home and don't know where to start, you've come to the right place. We're here to help you find the right home loan for your needs and budget.

    Programs for qualified borrowers. All borrowers subject to credit approval, underwriting approval and lender terms and conditions. Programs subject to change without notice. Some restrictions may apply. Not a commitment to lend. A loan advisor will review and provide you the terms, conditions, disclosures, and additional details on the interest rates that apply to your individual situation.


    1Marquit, Miranda. “How to Get Pre-Approved for a Mortgage.” Bankrate, April 20, 2022.


    2Cook, Jennifer. “How to Get Pre-Approved for a Mortgage.” Investopedia, December 18, 2021.


    3”Get Preapproved for a Mortgage.” Nerdwallet,


    4Wichter, Zach. “Fixed vs. Adjustable-Rate Mortgages: What’s the Difference?” Bankrate, May 20, 2022.


    5Bob Musinski, Mike Cetera. “The Pros and Cons of an Off-Market Home Listing.” Forbes, November 6, 2020.


    6Fuscaldo, Donna. “How to Find and Buy Off-Market Homes.” Investopedia, December 22, 2021.


    7Lewis, Holden. “Appraisal Gap: When a Home’s Value is Lower than Your Offer.” Nerdwallet, February 1, 2022.


    8Ruffner, Beverly. “7 Creative Strategies to Make Your Offers Stand Out in a Seller’s Market.” TheClose, September 10, 2020.


    9Sweeney, Erica. “Realtors Warn Against Writing Personal Letters to Home Sellers. Here’s What They Recommend You Do Instead.” BusinessInsider, September 1, 2021.


    10”10 Creative Ways to Make Your Home Purchase Offer Stand Out.” Mountain America Credit Union, May, 2022.


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