Are some buyers superbly well-qualified or dangerously over-confident? Well, could be either one but it's difficult to know when the buyer has decided on their own what financing they can obtain.

  It's a normal question to ask a potential buyer: "Have you been in touch with a mortgage professional?"  The response to that can sometimes be quite interesting. I've heard on more than one occasion lately: "No, but I don't see any problem qualifying for a mortgage". I especially like what comes after "No", as though that removes any need to contact a mortgage professional until they find the right house and want to make an offer.

 You can tell me that you have $3 million in the bank, no monthly debt obligations and haven't had a late payment ever, but if you're going to be financing a home purchase, I'm still gonna have you consult with a mortgage professional.

 It's not to insult you, and it's not that I don't believe you. It IS about helping you as a buyer obtain the strongest position possible and part of that is knowing a realistic price range that we have to work with.

  I've been a buyer myself more than once and wouldn't even think of seriously looking at homes without knowing what I could realistically afford and expect to finance. Nor would I want to fall in love with a house only to learn it's outside of what a mortgage lender would let me borrow. Sure, I could go look at any price range I felt like, but I prefer reality to fantasy. Dreaming up what price range I want to look at isn't going to get me very far when it comes to actually purchasing.

 The fact is, the mortgage landscape has changed. This isn't a commentary on the state of the lending industry simply a fact. Loan programs and standards that were available even months ago are gone, no longer available.  The lending industry hasn't been relaxing what they require from buyers, they've been tightening their requirements.

  For a buyer who hasn't purchased a home in a year, two, or more, the process and ease of obtaining a mortgage may be vastly different from their last experience with purchasing.

  If you're considering buying a home in the near future, the time to talk with a mortgage professional is BEFORE you decide on what price range to search. It's absolutely crucial to have a realistic idea of what price point and loan program you'll qualify for and if there are any credit issues, debt issues, potential pitfalls that would make successfully obtaining a mortgage more challenging for you.

 Then there's the added benefits of:

  -Knowing that a lender's equally as confident as you are that you're a well-qualified buyer

  -Being able to show a seller you're serious and not just "wishing and hoping" you can buy

  -Stronger negotiating position when you do find the right house

  -Avoiding disappointment and frustration when you find out what you really qualify for

  -Having the ability to find a house to match the financing instead of the other way around

 Unless you'll be buying the house with cash, the lender's opinion does matter and can save you a lot of heartache down the road. More than any other home search criteria, the realistic amount a buyer can finance or pay cash for is not optional. Whatever your realistic price range is, it's the one criteria that we can't change.

 Confidence isn't a bad thing, it just means a lot more when you and the lender are both confident that you're a qualified home buyer, whether that's now or will take some time to work on getting you there.  

Copyright©2008 by Diane McDermott, All Rights Reserved, "Well-Qualified Or Over-Confident Buyers?"