Have You Spoken with a Lender Yet?
Our colleague, Jerry Newman of San Antonio Texas, wrote a great post which explains in clear, simple terms why potential home buyers need to speak with a lender before they jump into the exciting, challenging process of looking for a home.
I would love to think that more of today’s homebuyers are getting into the Know Before You Owe procedure as required by the Consumer Financial Protection Bureau. But, I am still getting calls from many consumers, who want to start looking for a home before they have spoken with a loan officer or a financial lending institution.
All real estate agents know that’s like “putting the cart before the horse”. Homebuyers need to know how much “buying power” they have prior to searching for any homes. Besides, searching for a home is not like “window shopping”, because in today’s seller’s market that home that you fall in love with today, and want to go home and think about it overnight may not be there tomorrow. Homebuyers need to be prepared, or as we say in our real estate industry, get “Pre-Approved”, or at least “Pre-Qualified”. There’s a big difference between those two as well. That’s why the Know Before You Owe will be most beneficial to all homebuyers and their agents.
I received a call recently from a consumer wishing to look at homes in a certain price range. This person was a referral from a friend, but I always ask the magic question, “Have You Spoken with a Lender Yet”? She responded NO, but I know I won’t have any problems. I hear this a lot from homebuyers. So then, I ask her when was the last time you bought a home, and she answered that it had been about 10 years ago. I politely informed her that a lot has changed in the last 10 years, and especially in the last year when it comes to getting qualified and getting loan approval from any lending institution, especially with all the strict requirements and guidelines all the lenders are required to comply with Consumer Financial Protection Bureau.
Well she consented to having one of my preferred lenders to contact her, which he did, but after their visit she decided go with a lender that she had done business with in the past. After speaking with her previous lender, she quickly found out that she couldn’t get qualified or pre-approved for the amount that she wanted to spend. Now, she understood why I insisted that she speak with a financial lender before we started searching and looking at homes for sale in the market area. She needed to know exactly how much her buying power was to avoid disappointment from looking at homes that were above her price range.
Most homebuyers believe that if they make enough money, and have a decent credit score that they can purchase a home. While this maybe true for some, it is certainly not the general rule. There is this thing called “debt to income” ratio that all the lenders use to qualify or to approve homebuyers. This ratio can prevent you from qualifying, even if you have excellent credit. Plus, today’s buyers are required to have cash reserves for 2 or 3 months, and their down payment and closing costs. Even though there maybe state programs that can assist first time homebuyers, they still need to qualify for those state or city funded programs. One visit with your lender or some financial institution will quickly let you know what you can afford to buy, or if you need to fix or to repair your credit. So don’t be surprised whenever a real estate broker or agent asked you if you have spoken with a lender yet?
If you’re thinking about buying a home in the San Antonio market area, call Jerry at 210-789-4216, or visit my website for Homes For Sale in San Antonio, and let me schedule a viewing appointment once you have spoken with a lender.
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