When facing a competitive buying market, two things are key to landing the home of your dreams-- you must be prepared and you must show up well. By engaging a mortgage consultant early in your search you can simultaneously impact both.
While purchase price may frequently be the most important factor considered by home sellers reviewing an offer, viability of the buyer can be just as crucial. Sellers simply respond better to buyers who demonstrate they are prepared and serious. Some will even choose an easier path with a lesser purchase amount if they are confident in the buyer and terms.
How can you deliver this confidence to your seller? By making an offer that is free from major contingencies and provides proof that you are creditworthy and able to secure funding.
Meeting with a mortgage lender prior to identifying a property to purchase can give you the leg up you need. Better yet, most mortgage lenders are ready to meet you where you are in the process. This can include any of several levels of prep-- a preliminary conversation, a pre-qualification or a pre-approval.
Meeting with a lender for an informal conversation can help you understand the process and timing for securing a mortgage loan. It can also help you build a relationship you’ll need in the future while offering a chance to ask high-level questions. This can help you determine if a given lender is the right fit for your family as you share goals and discuss products and rates.
One step past a consultation is the pre-qualification. While similar to a consultation, a pre-qualification requires answering set questions from a lender about income, debt and other financial info. By using this information a mortgage lender can help you dial in your buying power and speak more specifically about how a loan might be structured.
A pre-qualification can help balance your priorities and give you an idea of payment and terms to aid your search. This is appealing for many buyers because it can deliver directional advice without a financial deep dive or excessive paperwork.
A pre-approval is the more formal step and is essentially like applying for the loan (albeit a fictional one if you have yet to identify a property). It requires a look at your financial situation, credit report, cash flow and other factors --with documentation required for all.
The outcome here is more than directional and will spell out precisely the amount of payment you qualify for. Taking this step now will significantly reduce the time and level of effort for the actual mortgage application process.
Following a pre-approval, your lender will be able to supply you with a pre-approval letter to include with any offers you write. That letter tells your buyer that you have been vetted by a mortgage professional and it can help your offer rise to the top of the stack in a competitive bid situation.
The Bottom Line
No matter which route you choose, it is a good idea to understand your credit-worthiness, options and payment limit prior to beginning a home search. Today’s mortgages offer incredible flexibility, but frequently additional options bring more questions.
Any reputable mortgage lender would be happy to walk you through your choices and their process via any of the services listed above. He or she will also be able to help you understand timing and other logistics if you have a property to sell or other factors to consider. If you don’t have a preferred lender, your real estate agent would be happy to make a referral.
At Zachary Adams and Associates we realize that the mortgage and homebuying process can be confusing. That is why we focus on educating our clients on all facets of the journey ahead of them while serving as a trusted partner looking out for their best interests. We’d love to partner with you to understand where you are in the process and help you take the next steps so that when the time is right, you are ready.