Before shopping for a new home, your real estate agent will ask you to talk to a lender FIRST and get pre-qualified or pre-approved (sometimes those terms are used interchangeably, but technically a pre-approval has actual verification of income with paystubs and tax returns instead of your lender just taking your word for it). However, you may not want to go through this process beforehand and even feel like your agent is being pushy. As someone who is both an agent and a homebuyer, I can tell you this isn’t the case.
- Unless you consistently pull and review your credit scores, you may not know how low or high they are or even if there are collections owed. It is not uncommon to have a surprised client after a discovery by a lender about past due payments or other negative items that will need to be cleaned up first before getting approved for a loan. Sometimes this is as simple as calling a creditor and paying something off, other times it may entail help from an outside source like a credit repair specialist. This process can take days to months to complete and the sooner you know what needs to be done, the sooner you can put a game plan in place.
- By talking to a lender first, you will have a much clearer understanding of what loan type and interest rate you qualify for. This is vitally important as just a quarter point difference can make or break your budget. Plus different loans have different attributes associated with them such as required down payments, mortgage insurance and closing cost differences. Having a better handle on what will be required with both cash to close and on a monthly basis will determine how much home you can actually afford which leads us to the next point.
- You may be looking at the wrong price range and this could work against you either way. Without talking to a lender who crunches all those important numbers for you, you may be looking at champagne homes on a beer budget. OR the opposite can occur and you could be trying your darndest to fall in love with a home in the $300K range but really you can go up to $325K which can make a difference in size, finishes and even neighborhoods.
- You MUST be ready to GO in this market. If you fall in love with a home and want to put an offer on it, you won’t even be considered a real buyer if you don’t have a pre-approval attached. Plus some sellers require a pre-approval even before allowing the home to be seen.
Until you have spoken with a lender, you may be wasting precious time, money on gas and perhaps most importantly, emotions, on the wrong homes. The more prepared you are as a buyer before turning on your computer to start an online search or getting in your car to drive to your first showing, the better off and ultimately happier you will be. For a list of our preferred lenders, visit our website at www.themeridianway.com and look under the vendor tab. Happy home buying!
By Holly A. Morris, Realtor
The Meridian Real Estate Group