Hey what’s going on everyone! Welcome back to my blog and boy do I have some good stuff for you. Now let’s dive in!
If you haven’t caught the sarcasm in my headline, let me start by saying I am being EXTREMELY sarcastic. Going to look for a home before getting qualified is a horrible thing to do. It makes as much sense as trying to keep a popsicle cold with a blow dryer, IT JUST DOESN’T WORK! Now let me tell you why, let me give you the 411 on why this is frowned upon.
In more markets, the consensus is that there are more buyers than available homes for sale. This means there is more competition out there when looking for your “perfect home.” Sellers won’t even entertain your offer unless you are pre-qualified to buy. If you get into a bidding war with another buyer and your competition has already done the footwork to make sure they qualify, you can bet your bottom dollar you are going to lose the bidding war. Check out this link by Freddie Mac on why getting pre-qualified/pre-approved is important if you’re a serious home buyer. Also, when going through this process, make sure you are using a local professional. I know this may not seem important right now, but ask any Realtor in the area and they will tell you nightmares about using out-of-state lenders or those on-line lenders, if you think getting a mortgage is as simple as pushing a button, you’re wrong. Many of these “television or on-line lenders” are making it seem like it is that easy. Don’t let them fool you. If you are prepared and know what you and your family are looking for, the process can be very simple if you’re working with the right lender.
Another big thing is knowing your budget. I talk to hundreds of people every month and one of the most common things that I hear is, “I need to know how much I qualify for.” This is one of the biggest mistakes you can make as a buyer. You need to figure out what is going to be a comfortable monthly payment and what a comfortable down payment will be. As a well-respected lender in my area, I make sure to ask those two questions. The last thing that I want to do is qualify someone for a $300k home if they’re only comfortable spending $200k. I put people in loan programs that are going to be advantageous to their entire family. The last thing I ever want is a family to struggle to make their mortgage payment. There is no need to “Keep Up with the Joneses,” maintain a good family budget and make sure you save for any unexpected expenses.
Getting pre-qualified to buy a home is important, we’ve established that. I want to show you what lenders look at when you give them your information. As Freddie Mac explains, there are 4 C’s in the mortgage process.
- Capacity: This looks at your ability to repay the loan. A lender will look at your ability and future ability to pay your debt payments and pay them on-time.
- Capital/Cash Reserves: This looks at the amount of verifiable money that you have saved in the bank or investments that can be sold for cash.
- Collateral: This refers to the property that you are buying.
- Credit: This looks at your credit history, score and the history of paying your bills on-time.
When a lender looks at these 4 things, this will help them determine if they can lend you the money to purchase the home. In many cases, you will only know 3 of these before you start your home search because the collateral hasn’t been identified yet. Capacity, Capital and Credit are enough for a lender to decide if you qualify. Click here to see a list of items a lender will typically require to see if you qualify.
If the down payment is an issue, there are different ways we can address that. You can get gifts from immediate family members and you could also see if you qualify for down payment grants or 100% financing programs. Click here to see what you qualify for. If you are ever unsure about credit score, down payment or anything else related to buying a home, contact your local pro and have them guide you through the process, click here. They do this every day and know exactly how to help you get into the home of your dreams.
Always remember, you want to look amazing to your sellers. You want to make sure you are FULLY prepared and ready to write a good aggressive offer on the home you want. In some cases, you may not get a second chance or the opportunity to make a counter offer.
I want to leave you with one last thing. Make sure you are being represented by a Realtor when buying a home. This does NOT cost you anything. The best parts about buying a home with a Realtor is that they are working for you, they negotiate the best possible terms when buying a home, they get PAID FOR BY THE SELLERS and they are a great resource for local market conditions if/when you ever decide to sell your home in the future. Click here and I can get you setup with the areas TOP REALTORS if you need a good recommendation.
Thanks for reading, please share this with your family, friends, enemies, the neighbor across the street or the person you bumped into at the grocery store. Anyone will be able to benefit from this article.
See you all the next time!