Step One in Finding a Home in Any Market: Lender Pre-qualification

 

Many homebuyers enter the housing market without much of a game plan.  Some drive through neighborhoods looking for yard signs… some search the free web sites like Zillow (whose listings are usually neither current nor complete) and Homes.com … 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 highly 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?  Equally troublesome would be finding a great home, then watching another buyer get it under contract while you attempt to get pre-qualified for your financing. 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-qualification letter from a lender you feel confident will be a contributing member of your team in the home buying process.  Pre-qualification 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.