What Buyers Need to do BEFORE Searching for a Home
In the Puget Sound real estate market, there's no way around it: you must have a pre-approval for a mortgage before we can even put in an offer on a home for you. It's not that way in many areas of the US--but in our region, an offer submitted without a pre-approval letter from your lender is an offer that will immediately go to the bottom of the pile or be rejected.
Why is that?
We always advise our buyers to look at it from the seller's perspective. If you were selling your home, which offer would you accept: an offer with proof that the potential buyer can actually afford to purchase the home--or a higher priced offer with no details on how that buyer plans to pay for the home. Pretty simple answer, right? Also, homes that are priced correctly move quickly here--it's still considered a "seller's market" basically because there are more people wanting to buy homes than there are homes for sale. So buyers who've already started working with a lender can close on a home more quickly than a buyer who starts the application process for a loan AFTER putting in an offer. Sellers aren't really keen on waiting to see if, in fact, you can qualify to buy their home--they want to have all of that confirmed BEFORE they accept your offer.
That's why you need to do a little work up front so that we can position your offer to get YOUR offer accepted.
Here are a few steps you can take when you're ready to get serious about buying a place of your own:
Credit history: Take a good look at your credit report and make sure it is accurate. If you don't have a credit monitoring service, consider subscribing to one. For an accurate and FREE way to view your credit history, go to https://www.annualcreditreport.com/index.action. If you see any mistakes on your report or find something that you need to take care of, work to address that before applying for the loan. And just in case you may have any judgments against you that don't normally show up on your credit report, they WILL show up at some point.
Debt-to-income ratio: Lenders are going to tell you what THEY think you can afford. They take a look at what you're paying on credit cards, cars, and other monthly expenses and apply that against what your monthly payment will be on your new home. If your pre-approval comes in lower than you expected, we can shop for a lower-priced home if need be, perhaps in a different neighborhood, or a smaller house. Bottom line: Work to pay off debt prior to applying for a loan and keep your monthly expenses as low as possible.
Verifiable information: Make sure everything ready for your application--from your tax records to your employment history, is accurate and you have documentation. Be proactive and gather all the documents your lender requires. They'll want bank statements, pay stubs, at least two years of tax returns and more. If it feels like an invasive process, it is. Lenders want to know that you can afford to pay them back for what may turn out to be the biggest loan of your life.
Just say NO to Big Purchases: We have seen more than one offer go down in flames in the middle of a home purchase when a client decides to buy a car or a boat or something else that will adversely affect their debt-to-income ratio. Lenders are checking your credit pretty much right up until the day you sign the papers transferring the home into your name. So, we're all for you buying that new truck--just wait until your home has CLOSED.
Work with a LOCAL lender: You've seen the commercials, we see them too. There are a number of big national lenders who promise you the moon--but from our experience, they often fall short of the mark. Local lenders can put a last minute approval letter for you at 7pm on a Saturday night or early on a Sunday morning (which happens all. the. time.) and someone in Detroit or Atlanta may not be able to offer the same level of customer service. Also, a pre-approval from a local lender may also get placed higher on the list when it comes time to make an offer. If a listing agent has had numerous bad experiences with the same big box lender, they may be hesitant to accept that offer. Bottom line: the person/company that is issuing your pre-approval letter matters.
If you have any questions about buying or financing a home, please reach out to us. We work with some of the best local lenders in our area who will help you get your financial info together and find a great loan that fits your specific needs.
Let's find you a place to call home!! We would be honored to help you.
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