Updated: Oct 28, 2019
Purchasing a home can be an extremely stressful endeavor. We have several steps that we take buyers through to minimize the stress and make the experience something to look forward to. This Blog will go into detail of each step of the process.
The first step in buying a home starts with finding a lender that you want to work with and getting prequalified. It may seem tempting to call the big lenders and/or online companies that offer what appears to be amazing rates. What we have found over time is that creating a relationship with a banker or mortgage broker that has the time and desire to get to know you and your particular situation will greatly reduce the stress throughout the home buying process. We have also seen that the lender you choose will be able to meet or exceed the true cost of the loan that many of the big banks and online lenders offer.
Teaser rates from the big lenders may have hidden fees that in the end cost you more. By creating an open trusting relationship with a lender they can help you understand the true costs. This should be done before you even begin looking for a home on your own. It should be done before you contact a real estate professional. This is the person that will help you through the tough and stressful times of the financial portion of home buying process. The prequalification does not pull your credit and is based on what you tell your lender. The key is to be completely open and honest about what you know about your credit history. Don't let your lender find out about that bankruptcy or poor payment history after he pulls your credit. This relationship has to be built on trust from both sides.
You can learn a lot from just using free tools such as Credit Karma to view your credit score, not always the same as what a lender may use, but close enough to start to make decisions. You will also see any derogatory remarks that you can challenge and get cleared up. The time to take care of this is as soon as possible once you learn about something. You can also start working on improving your credit score at this time by reducing the amount of credit used to be low 30% on every credit line, preserving the oldest credit line to show longevity, making sure that you pay your bills on or before they are due to avoid dings for late payments, and other methods to improve that critical credit score.
Once you have prequalification you now have the tool in your hand to start looking for a home that will meet your needs and stay within the prequalification limits. Nothing can be more stressful on a relationship than going out and finding the dream home only to find out later that you are not qualified to purchase it.
This sets the stage for the entire process that follows.
It allows you to make offers on properties with confidence. The seller will almost always ask for the prequalification letter to be submitted with or shortly after the offer is submitted. With a strong relationship with your lender, they will write a prequalification letter for each offer you submit that matches the offer amount so that you are not revealing to the seller your upper limit capability. If you are working with a call center lender, you may not get this kind of personalized service.
In the next Blog we will discuss the search process with tips and tricks to keep you at the top of your game and filling your knowledge base with important tool to ensure that you don't overpay for a home.