Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.

The headline reminds me of the proverbial saying, “Is the glass half empty, or half full,” which is a common expression used to rhetorically indicate that a particular situation could be a cause for optimism or pessimism depending on an individual’s perspective. We have reached the half-way point of 2018, a time when one can be optimistic about the remainder of the year to come or what was accomplished thus far, or pessimistic about a wasteful first half and frightened about the months ahead.

Another interesting dichotomy is the activity in the marketplace which has seen rising home prices and rising mortgage rates. With interest rates on the rise since September of last year, it’s not typical for home values to increase as well. Moreover, it is highly unusual to see a rising stock market on top of it all. Historically, while they don’t follow in exact harmony, these market gauges typically contrast one another. This cycle, however, we aren’t seeing the trend that the analysts are accustomed to, causing diverse speculation on what’s yet to come. The optimists and pessimists are once again dueling theories of “bubbles” and “over inflated” numbers versus stability and fundamental rationality.

Regardless of one’s opinion and predictions as to where rates and home prices are going, people are just trying to make the most sensible financial decision in real time. Clearly, buyers are still buying, and the increase in price and rate have not deterred prospects from pulling the trigger on a home they want. That said, I am starting to see hesitation and second-guessing in the streets which is telling me that a shift is coming.

I have clients that I have been working with for over 17 months since they first contacted me requesting a pre-approval on a house they were considering. Almost a year and a half later, and at least eight pre-approvals later, their offer was finally accepted on a charming single-family house in Bergen County. It didn’t come easy, as there were multiple offers on this home, so their bid was more aggressive and their margin of error was narrower. They had a drop-dead mortgage contingency date of June 29th. Even meeting that date was a challenge, but with their sincere encouragement and persistence, I agreed to consider after all that we have been through.

I had their commitment in-hand before the contingency date, and they kept emailing and texting me to send it to the Realtor. I refused and demanded that they meet me in my office. Yes, I had their mortgage approved before the deadline, but my experience has taught me that the same glass cup can be half-full and half-empty at the same time.

I finally got them into my office and explained that there were two items on the approval that I wasn’t confident they could fully satisfy. They insisted that I send over the approval regardless as not to be in breach of their contract. I clarified that if I sent over the commitment and they could not satisfy the requirements, they would undoubtedly meet their mortgage contingency, but if they couldn’t close they would lose their contract deposit entirely. They finally realized that there are two sides to every coin, and they heeded my advice to think twice before providing the commitment. While the story is only halfway done, the article space is over…

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