The best reason for a home buyer to contact a real estate professional is to make sure that mistakes are avoided and that a home buyer does not sabotage his home purchase. Here are my “Top 8” that I discuss with my buyers prior to the home search.
- Meet Your Mortgage Broker
Meeting with the right mortgage lender to discuss your options is key to success. You have no idea what you can afford until you have that mortgage encounter.
Loan parameters change and new programs pop up. These up-to-the-minute alterations to the financing world keep the best mortgage lenders are on their toes – which leads to No. 2 —
- Seek Solid Financial Institutions
“The mortgage industry is rife with scams—including a slew of fake or unreliable lenders,” according to Inman.
Real Estate professionals have seen too many deals “fall through” because of shifty mortgage practices.
To ensure your financing is rock-solid, ask your real estate agent for lender recommendations instead of google.com. Your real estate professional should be able to give you a buyer’s guide to keep you on track.
3: Know the Difference: Pre-qualification vs. Pre-Approval
Pre-qualification means having a conversation with a lender about the state of your finances with no exchange of documents.
Pre-approval involves the lender gathering all necessary documentation—your tax returns, bank statements, pay stubs, and more—packaging the loan, and submitting the file to an underwriter for review.
Once approved, a written commitment (now termed “loan approval” on the FR Bar Contract) is issued by the lender.
Your real estate professional would include your pre-approval letter with the offer. This is important for the Seller’s comfort level in accepting your offer. The more reliable the lender, the better your chances are of getting the offer accepted.
- Stay Within Your Price Range
With the HDR (high-dynamic range) photography and over-the-top staging portrayed in some of the listings on popular websites, it is easy for buyers to become disillusioned with what they can truly afford.
Resist the temptation to shop online for homes that are simply outside your price range.
- Make Your Highest and Best Offer – Especially in a Seller’s Market
Your sales professional must determine reasonable list price via a market analysis. If a home is priced well, offering “close to asking price” with your preapproval letter attached makes sense in this seller’s market. Having all associated addenda accompanying the offer is a great idea.
- Write a Letter to the Sellers
Tell them why you really want to purchase the home. Be honest, not contrived.
- Do NOT Make Major Purchase(s) While You Are Under Contract
Opening new credit accounts or purchasing a car or boat can jeopardize your financing. Your credit will be pulled before closing to see if you qualify for the loan.
- Budget for Closing Costs
Be sure to have a savings with enough cash to close. Closing costs vary, and the differential in the loan amount plus 3-4% of the home’s purchase price along with an additional cushion need to be securely protected to ensure a smooth closing.
Follow these guidelines and congratulations, new home owner! This is your best step to personal wealth!