Within moments of your first interview with a real estate agent, you’ll here the words “Prequalified or Preapproved for a mortgage“. Now isn’t the time to run for the hills. Most home buyers, buy with the help of a mortgage. So unless you can dig up a few hundred grand from the back yard, sooner or later you’ll need to speak with a mortgage lender. Don’t fight it. Here’s why:
In your home search;
- Helps to set your spending limit
- Allows you to focus your search realistically
- Aids your real estate agent in selecting homes for you to view.
In your home buying negotiations;
- Gives you an edge against a competting bid for a home, if the other buyer hasn’t been approved, the seller now knows that you can follow through on the purchase.
- Shows that you are a serious home buyer.
Do’s and Don’ts of selecting a mortgage lender.
- Do look at your credit prior to speaking with a mortgage lender, there are several websites that allow you to check your credit report, if there are any blemishes or errors, get them fixed, not doing so could very well cost you money, high interest rates or keep you from buying altogether.
- Do ask your real estate agent for his/her recommendation, you should get at least 3 names.
- Do interview the mortgage lender, ask questions, and if you’ve never had a loan, take along someone you trust who has.
- Do look at the mortgage companies fee schedule. (amount they charge to loan you money)
- Only when you’ve narrowed your search down to 2 companies, do you let them pull your credit report.
- Do ask the mortgage lender if they will provide you with a preapproval (prequalification) letter.
- Don’t go from company to company letting everyone check your credit. (it will bring down your score)
- Don’t settle for just one name without researching, it could cost you hundreds of dollars.
- Don’t go out a buy a car, furniture or other high ticket items after you’ve qualified for a mortgage. Nothing kills a deal faster.
- Don’t switch mortgage companies in mid transaction.- Some times it may be necessary – closure of mortgage company, etc. but in the long run, it causes delays in closing and usually irritates everyone involved in the purchase of your new home.
You are a Savvy Buyer and this is your future, be in control. Not just of the home you buy, but of the people you choose to do business with.