Purchasing a home can be a stressful and expensive investment… possibly the single largest investment of your life. For that reason, it is critical that you have experts on your side who can guide you through all of the ups and downs inherent in the home-buying process. If you will be making an “all cash” offer, and you have purchased a home before, a Realtor® may be the only team member you need. However, if you are planning on obtaining a loan for your purchase, your team must consist of both a Mortgage Originator (lender/broker) and a Realtor® (real estate agent).
Choosing a Mortgage Originator
A mortgage originator (aka “loan officer”) should be chosen wisely based on knowledge, customer service, referral sources and finally pricing. In speaking with a reputable lender, a prospective home owner can begin to understand exactly what they may qualify for based on various factors such as down payment, income, loan type, mortgage rate, credit score, revolving debts, etc. Your loan officer should be both friendly and well-informed: Not only will they be acting as your financial expert, they will also be speaking with many parties on your behalf (such as the real estate agents, title representative, escrow officer, etc.). Once your loan professional has attained a general idea of your goals and has answered all of your important questions, they will then ask for all of the pertinent documents which will be used in determining your maximum purchase price. These documents include taxes, W-2s, 1099s, pay stubs, bank statements, photo identification and loan application. While providing this information does not guarantee your rate or costs, quoted rates and fees must generally fall within certain tolerances.
The Pre-Qualification Process
Commonly, but incorrectly, referred to as the pre-approval process, your pre-qualification is your first and most powerful weapon in your home-buying arsenal. It is only after you have you have attained pre-qualification status that you should begin house hunting. Many times, eager home buyers will start their search (either online or with a Realtor®) without obtaining a pre-qualification. However, this is generally a mistake because most potential buyers have no clue as to how much loan they will be able to obtain. Once the qualification process is complete, your loan professional will provide you or your agent with a pre-qualification letter to accompany all purchase offers. When this letter originates from a lender known to get loans closed, the listing agents and sellers will be far more likely to choose your offer over other equivalent offers.
Choosing a Realtor®
Once you have been pre-qualified by your lender, you will be ready to begin making purchase offers. At this time, your best bet is to find a trustworthy Realtor® to help you through the next few steps. While websites such as Zillow,Realtor.com, and Redfin make it easy to do online searches, you will only be gaining access to “consumer end” information. While doing this type of online research is fine for gaining an understanding of which areas you can afford and which properties you may be interest in purchasing, you will still be missing valuable information which only a trusted real estate agent can research and verify. Additionally, tech savvy real estate agents can provide you access to their personal online search data which will allow you to make notes, ask questions and save your favorites. Your agent can then review your selections and contact you to go over the details before your physical search begins. In this way, you can limit the time you spend “shopping” for a home by seeing only those properties which actually fit your needs and budget.