Important to Pre-qualify with a Lender
One of the most important part of buying a home is making sure that you are pre-qualified with a lender. Some buyers prefer to use the bank that they do business with, others prefer smaller lenders. I generally recommend the lender based on the amount of the loan my client is obtaining.
I find that most of my buyers in the higher price range will choose to go with one of the bigger banks that they do their banking with, like Wells Fargo or Bank of America and that is perfectly okay. I generally communicate with my client’s lender throughout the entire process, making sure my client is communicating with their lender and getting them any necessary paperwork. My job is to make sure that we are on target for closing day.
For my clients who are in the lower price point and particularly those with “not so good credit”, I strongly recommend using a Mortgage Broker like my friends at Silverton Mortgage or Loan South for example.
Why You Want a Loan Pre-qualification Letter
The loan pre-qualification letter lets both my client and myself know just how much house they can afford. Once you know how much house you can afford, then we are not wasting time looking at homes above your budget. What’s wrong with looking at homes above your budget you might ask? For starters, it’s a big disappointment to a client when they see a home with all of the upgrades, bells and whistles that are appealing to them, only to find out they cannot afford that house. Once they see those, guess what? The homes that they really can afford look like “crap” (for lack of a better term), because they have a difficult time getting the “perfect house” out of their mind.
Good Example of Why you need to Pre-qualify
Recently, I had an agent show one of my listings that was priced at $499,900, comps in the neighborhood and nearby neighborhoods were selling any where from $465,000 to full price with the seller paying little or no closing costs. This agent presented an offer of $400,000. Her buyer was pre-approved for $350,000, granted that does not mean the buyer could not be pre-qualified for more. That however raised a red flag. I wondered why a buyer who is only qualified for $350K would be looking at a half a million dollar house. We countered the offer at $485,000 letting the buyer know that this house is worth more than their offer but we are willing to tango. They came back with a counter of $400,000 and now asking for $12,000 in closing costs, essentially asking my client to sell her home for $388,000. Now why would my seller accept the counter offer when she turned down their first offer, I have no idea what this agent was thinking. This is a great example of a buyer not qualified to buy a home that they can afford or maybe an example of an agent who could not advise her client. Not only was it a waste of the agent’s time but the buyer’s as well and not to mention mine.
There you have it, I prefer to educate my clients on the current market conditions. The first step to buying a home is to obtain a pre-qualification letter from a lender, that way you begin your search by looking at homes that are affordable and attainable to you. Once my clients decide on a house to put an offer on, I research the neighborhood sales – what has sold recently, what is currently pending and sometimes what has expired. This way, my client can make an informed decision as to what to offer on the house and more importantly we already know that the home is within my clients budget.
Are you searching for a home and have not yet been pre-qualified?
Contact Karen Smith at 866-465-2736. I can recommend a loan officer for you to speak with and I will walk you through the buying process and help you find your dream home or investment property.