Many
homebuyers enter the current housing market without much of a game plan. Some drive through neighborhoods looking for
yard signs… some search the free web sites like Zillow and Trulia (whose
listings are usually neither current nor complete)… some buyers contact a
realtor to find prospective homes and shuttle them around, but don’t really
understand the offer or contract process.
In this competitive market—and really in any other market—STEP ONE in the process of finding a home
should be securing pre-approval from a competent, competitive lender for any
mortgage financing the buyer may need.
There
are several very good reasons for this.
First, the buyer needs to know how much of a home he or she can really
afford and what sort of contract price he or she can realistically expect to
close. Who would want to spend hours,
days and weeks looking at homes and eventually finding one you really love,
only to discover you cannot secure the financing you need to make the
purchase? Secondly, most sellers in this
competitive market will not even consider an offer that is not accompanied by a
mortgage pre-approval letter. Why would
a seller agree to put a home under contract and essentially take a property off
the market unless he or she has some reasonable expectation that the contract
will actually close? Third, if there are
issues that need to be addressed to secure loan approval (such as credit issues…
debt-to-income ratio issues… etc.), the buyer needs to identify and address
them BEFORE he or she finds a home, not afterward.
Further,
it is important to choose a lender wisely and carefully. The lender should be a member of the buyer’s “team”—someone
the buyer can count on to get the transaction across the finish line. The buyer should also be satisfied that he or
she is being offered the best rate and loan repayment terms available to him or
her. Many buyers don’t know where to
begin, so they visit the bank at which they keep a checking account and think
they may have the issue covered. Not so
fast. Lenders, and even individual loan
officers, can vary substantially on things like rate and loan terms, but also
on things like communications and efficiency of loan underwriting. This can turn what should be an exciting home
buying experience into an exercise in unnecessary stress and frustration. Care must be taken to choose that lender
wisely.
At
Eric J. Dorer Real Estate, we have lenders we work with regularly. We work with them because our experience has
been good with them. We know they are
competitive, competent, professional and as painless as possible. We receive absolutely nothing from a lender,
nor do we want anything from them except a smooth, painless, successful
transaction.
Step
One in finding a home in this market or any other market is making sure you
have your finances in order, and that involves getting a mortgage pre-approval
letter from a lender you feel confident will be a contributing member of your
team in the home buying process. Pre-approval
is usually a relatively quick and painless process involving review of the
buyer’s credit, income and debt. It can
take as little as a day, and it costs nothing.
For all the reasons outlined above, failure to do this can ultimately mean
frustration and failure in finding a home and getting it under contract. Securing that pre-approval letter positions
the buyer to take some control of the process and move forward to an orderly
and successful home purchase.
