I’ve held a real estate license for over 20 years and on occasion have seen a particular look or heard a particular tone from a new buyer when I ask if they’ve already talked to a lender. A look and/or tone that suggests I am somehow questioning their financial integrity or being too pushy and trying to close a sale before we’ve even started. Neither of these are true. There are 3 primary reasons your Realtor will encourage and sometimes even insist you get pre-approved before scheduling a tour of a home.
1) More. This is always a great discovery, that you may actually qualify for more home than you realized. You may also qualify for a lower interest rate than you thought possible which will impact your monthly payments favorably. A price increase of even $20,000 can make a difference in the quality of the homes you are looking at. The only way to determine what your personal qualifications are is to get the process rolling with a lender. They will pull your credit and be able to see what your score is as well as determine your debt-to-income ratio. We recommend you shop around for lenders as some will have different programs with different interest rates. Your agent should have some solid referrals and banks and credit unions may have some good options too.
2) Less. Maybe this doesn’t sound like as great of a discovery but it is still quite valuable as it will save you time and heartache in the long run. There is nothing worse than falling in love with a house only to discover you qualify for less. I have had to learn this lesson the hard way as early on in my career, I was less apt to ask my clients to get pre-approved before putting them in my car and touring them around town. Because I was afraid of appearing too pushy, we wasted countless hours, gas and emotions by the time we realized we were looking in the wrong price range, or worse, they needed to take some steps before actually qualifying for a loan. A good lender will be able to inform you of some credit issues you may be unaware of and help you with an action plan to improve your score in a timely manner. The higher your credit score, the lower your interest rate and monthly obligation will be. Definite win-win!
3) Competitive Edge. In today’s highly competitive seller’s market, you may find yourself in a multiple bid scenario where the listing agent immediately asks for all interested parties highest and best offer as soon as the home hits the market. You may have only a couple of days from the time it goes live to the time all offers are due by. And your offer likely won’t even be considered if you don’t have a pre-approval letter from a qualified lender to submit with the offer. Also, in the higher price points, sellers may actually require you submit a pre-approval letter before they will even allow you to see the home.
As an agent who has experienced every one of these scenarios throughout the years, multiple times, I have become much more assertive in my request that a buyer talks to a lender before we physically tour anything. I know I’m advocating for their best interest and that in the long run, it will make for a much smoother and satisfying experience for all parties involved.
If you’re thinking of buying a home and need a lender referral, check out our website, www.themeridianway.com. We have several creative and aggressive loan officers we have worked with for years that serve our clients with excellence and integrity.
By Holly A. Morris, Realtor
The Meridian Real Estate Group