What?! You Haven’t Spoken with a Lender Yet?!
April 21st, 2008 Categories: For Buyers, Money & Mortgages
Unless your idea of fun is to waste hours- days- weeks- months of aimlessly looking at home after home without any idea as to the price you can REALLY afford, I really must insist… talk to a lender!
Let’s be honest here… why have you put it off?
Is it all the stories of sleazy lenders out there that preyed on innocent people, getting them involved in loans they had no business being in? Are you worried that they’re going to try to hook you into working with them, with no room for escape? Are you afraid of what they might tell you that’s lurking around on your credit report, ready to burst your dream of home-ownership?
All of these are valid concerns- but just plain wrong! Let me tell you the truth about what will happen when you talk with a lender:
First and foremost, you need to go to someone reputable– do NOT base an important financial decision on a late-night commercial you saw for some internet-based, fly-by-night company that have inexperienced “lenders” selling their loans, betting on your willingness to get a “deal” (now, granted, most of these kinds of companies have gone out of business with the mortgage crisis- thank God!).
You need to ask a Realtor that you know and like for their opinion about a couple of lenders. They have worked with them on many previous home sales, they know how they treat clients, they know their reputations and what kind of loans they offer.
Once you have the name of someone they trust, either let your Realtor give them your number (probably best) or call them yourself. Get their advice! They’re not out to get you. Rather, they’re on your side and the lenders I know are GOOD people and really want to help you!
Here’s what they will ask you…
- They’ll want to know about your income for the past few years
- They’ll ask you about any assets you may have
- They’ll ask how much you’ve saved up for a down payment
- They’ll ask about anything on your credit issues you may have had in the past.
They will want to run your credit. Don’t have everyone in town run your report but let one lender run it once. They need your credit score to really pinpoint what kind of loan you can qualify for. Without this, they can’t give you a sure answer on what kind of loan would be appropriate for you.
After your conversation with them, they hopefully can issue you a pre-qualification letter that can accompany an offer. This simply means that they’ve spoken with you, they’ve verified your credit and based on that information, they can safely say that you can get a loan for that amount. It’s good necessary to have this ready on file- before you find a property.
Now with so many people having difficulties with their loans, most sellers are not accepting pre-qualification letters with offers. They are requiring pre-approval letters. What’s the difference? A pre-approval letter is more in-depth and it means what is says- that you’ve already been pre-approved for that loan, a more advanced step than just a pre-qualification letter. This takes about a week, so again, start early!
Why is all this important? Simply put, you need a game plan.
Whether you want to buy a property next week, next month or next year, or you have bought and sold many homes in the past, you need to know if there’s something currently on your credit that you need to clean up (Ever hear of identity theft? Happens all the time!) or if you need to save up a bit more in order to get a loan you like. Without speaking with someone who knows the current products (and they change literally every day), you have both hands tied behind your back. You also need a price range. How in the world can you find that perfect property if you don’t even know what you can afford?
If those reasons didn’t give you enough reasons to speak with someone, here’s another: If a hot property comes on the market and you don’t have your ducks in a row with your pre-approval, you’ve just missed the boat. That pre-approval letter must accompany your offer and if you’re competing against other people (who will all have those letters), your offer just looks that much weaker.
Oh yeah, and you’re not chained to the first person that you speak with about getting a pre-qualification or pre-approval letter. You still have time to shop around. You see? There is no reason NOT to talk with someone about your potential loan.
So, no more procrastination… save yourself oodles of time and call that lender! Or call your Realtor and get a lender they like to give you a call!
I wholeheartedly agree with this article! Realtor here. With the current mortgage situation ever changing, you MUST speak to a lender who can run your numbers and tell you EXACTLY how much you can afford. Without knowing that, you will be wasting your time, your realtor’s time, and everyone else’s involved. For a lot of buyers, it will ultimately come down to what the monthly mortgage payments will be, and there are many factors involved that only a lender can tell you once they have looked over all your financial documents and your credit. Here on the Westside, many more deals are popping up - and by deals, I mean beautiful properties in great neighborhoods that are PRICED WELL. Those properties get multiple offers in the first week! They will not wait for you to get pre-approved which may take up to a week. If you don’t want to miss the opportunity to even be “in the game” when your dream home goes up on the market, speak to a lender and get pre-approved now!
Sure wish all buyers would talk with a LOCAL lender before they start the home buying process. It sure makes all our lives easier.
Great advice. First things first, talk to the lender…get set up, then buy.
Aloha,
Keahi Pelayo
RE/MAX 808 Realty
877-737-2093