This is such a great & timely post with the spring market upon us! Many buyers hear all the great news about afforability & the great interest rates which is all 100% TRUE! Problem is, all that looking on line & buyers still don't know what they can afford!
Don't put the 'cart before the horse' or should that be house! Talk to a reputable loan officer (NOT online!) about your finances & goals. They are there to help you through the maze of financing options. They really are your ally in the home purchase process.
Notice what all 3 scenarios have in common? Have you been in contact with a loan officer? Well have ya?
Thanks to Eric Michael for this great advice.
It's a Loan Officer, Not a Serial Killer!
Scenario #1. You call a real estate agent because you saw a house online and would like more info. Agent describes the house and you get excited, it sounds exactly like what you're looking for. You say, "I gotta see this house! When can we go?" Agent's response, "Have you been in contact with a Loan Officer?"
Scenario #2. You and your spouse have been driving around the city, looking for "for sale" signs in front of houses that you're interested in. This is one of the areas you've always wished you could buy your first house in. House looks great. There's even some young kids playing basketball next door. They seem to be right about the same ages as your kids. Your wife dials the number on the sign. "Hi, this is Eric. How can I help you?" "Um, hi. We were wondering if you could tell us more about the house at 123 Perfect Lane?" After hearing all about the house, you've just gotta see the inside! When you ask, the response is "Do you have a pre-qualification letter from a lender yet?"
Scenario #3. You just got a raise at your job. The lease is just about up on your apartment, and a few of your friends have purchased homes recently. It's your turn. You sign up for lists of homes from a dozen real estate sites. They're all the same lists, but whatever. You thought there might be something special out there and you didn't want to miss it. You find a few that you want to look at. That's when you call your friend, who's been in the business for a while. You tell him that it'll be cool to hang out and look at some homes, maybe get a few beers afterward. Friend agrees and says, "Before we hook up, have you talk to a lender yet? If not, I have a few that I've worked with in the past that I could recommend, because we need to make sure you get pre-approved before we start looking at homes."
See the pattern here?
There's a reason that we want you to talk to a Loan Officer before we go out to look at homes. A few reasons, actually.
- You need to take a look at your credit history. Lenders have minimum credit scores that need to be met before lending money for a house.
- You might think that you can afford a certain amount, only to learn you have to look at homes that are a lot lower than you thought. Conversely, maybe you can qualify for more than you thought, and your dream house just got a lot nicer. Looking at homes that you could never qualify for is depressing. Trust me.
- We run a business. We don't get paid unless you purchase a house. If you can't purchase, we can't waste our time, money or resources. It doesn't make business sense.
Debt to income ratios, time on your job and amount needed are a few more things that they Loan Officer will have to figure out before determining how much, and IF you can qualify for a mortgage loan.
Sometimes it's scary to find out what your credit is, or what you can truly afford. Sometimes it's even better to continue renting for a while to save up more money for that down payment or to pay off a few credit cards. The Loan Officer will help determine the best strategy for you.
Ultimately, a trustworthy Loan Officer is an integral part in the house/condo buying process. They can be an ally. As long as you remember, It's a Loan Officer, Not a Serial Killer!