Nothing is more exciting than planning to buy a new house. It is the start of a new phase in life whether it is your first home or if you are up- or down-sizing. Some people enjoy the hunt and some people are driven to complete the process so they can move in and get going. I love helping buyers find the perfect place almost as much as they do so generally speaking, it is a great experience all the way around.
Start at the Start if You want to Win with Your Preapproval
You want to keep your home purchase on track from start to finish, so it is incredibly important to make sure you don’t skip the crucial first steps. A few years ago there was some great confusion over who won a major marathon race because a runner everyone seemed to have missed crossed the finish line first. All tired and sweaty, this runner came chugging up to the finish line and broke the tape. Being a televised event, the commentators were at a loss to explain how they had missed a runner that was running ahead of the presumed front-runner. Then the truth came to light. It turns out the “winner” had just stepped into the race about five miles from the finish line. He ran long enough to break a sweat and the network, being focused on who they thought was running in first place, missed what appeared to be the runner at the tape and had to stammer around trying to save their coverage. But did this “winner” actually win the race? No. He was found out and because he didn’t start from the start, he ultimately won nothing but scorn for his little trick.
The same is true for buying a house. If you don’t start from the start, there is a real good chance you won’t actually win the race and close on your new house.
Preapproval is the Start of the Race
The starting point for home buying begins either with your lender or with your real estate agent who will help you find an appropriate lender. The process is called preapproval. Your lender will work with you to establish how much you will be able to borrow and this figure will determine the price range you can look at with confidence that financing will not become a problem down the road. Any Realtor who does not request that you get preapproved before starting to show you houses is wasting your time and theirs. And here’s why. Getting a mortgage, especially today, is not as easy as it once was. There was a time when you could pretty much assume that you could borrow whatever you needed to buy a home but that’s no longer a valid assumption. A real estate agent who is willing to spend your valuable time showing you homes that may or may not be in your price range, is not helping you buy a home…they are acting as a tour guide. On the other hand the Realtor who wants you to start at the start is going to make your home search efficient and get you to the house you want quicker. Ask yourself this: “Do you want to work with a tour guide or a qualified real estate broker to purchase you home?” Hey, we all know it is more fun to “look at houses” than to sit down with your banker, but it is really a necessary step.
How Does Your Mortgage Preapproval Help You and Your Agent
Keep in mind that a real estate agent’s job is to help you find a house you can afford to buy. Armed with your preapproval they will help you find homes in your price range, which makes both your and their time investment both efficient and effective. Additionally, when it comes time to write an offer, the fact that you are preapproved takes all the guess work out of the seller’s calculation if you can actually get financing. In fact, if presenting your preapproval is not part of your offer, a good listing agent will put that requirement in their counter offer. Believe me, few sellers will look positively on an offer that has a finance contingency but that offers no assurance that you can get your financing. Your preapproval letter is that assurance and says you are a serious buyer who can afford the home. Serious sellers like serious buyers who are willing and able to purchase their home.
How do You get Preapproved?
The process is simple. Call your financial institution’s home mortgage department. Tell them you want to get preapproved for a mortgage. They will tell you exactly what documentation they need to make that happen. It usually takes between 24-48 hours to get your preapproval, but some lenders have the capability of telling you at the end of your meeting what you will be conditionally preapproved for. Be aware that “online” credit scores you may get off the internet may not reflect the credit score you bank will use. There are different ways to calculate credit scores and the only one that is going to count is the one your bank pulls.
In the end, your best strategy and surest chance of getting the home you want is by starting at the start and getting your preapproval in your back pocket. Share this with your real estate agent and you will be on your way to your new home!
Nelson & Associates Realtors can Help You Find a Lender
As a full service real estate brokerage, we work with a number of lenders and will be happy to provide you with a list of lenders who have successfully helped our clients through the years. A good place to start though is where you do your checking and savings. Not all lenders do all kinds of programs such as FHA, USDA, VA, etc., but if you are interested in that type of loan we can help you get connected. Contact us today and we can get started right away!