What First Time Buyers Need to Know . . . Why a Car Loan is NOT The Same as a Home Loan

Industry Observer with RETIRED / State License is Inactive Inactive License Oregon

Lenn Harley has epiphanies.  When she does, she shares them with us and they're really good!!

I had one the other day (Saturday, to be exact) when I received a call from a first time buyer.  While talking to the nice young man something weird happened. 

I said, "You know, getting a car loan is the EXACT OPPOSITE of getting a home loan."

And I explained:

  • A car buyer goes in to the lot.  They test drive the vehicle, like it and then they apply for a loan.  The mantra of "What can I do to get you in this car today?" is often heard. 

When buying a car, the financing is done AFTER the decision is made to buy the car.  And boy howdy, they'll find a loan for the car buyer.  No credit, low credit, crappy credit . . . NO PROBLEM!  They'll be able to finance a car loan.


  • A home buyer goes in to the house.  They check it out, like it and then . . . if they make an offer based on the "car buying" mentality of applying for a loan AFTER they've found a home, they might not be able to close the deal.


Financing guidelines.  Plain and simple. 

  • Buyers might be looking at property they are unable to qualify for
  • The home buyers income-to-debt ratios are too close and they need to come up with more down payment in order to purchase . . . which they may not have
  • The buyer CAN qualify, but opps, someone with a pre-approval submitted an offer and the seller opted to go with the buyer who was pre-approved
  • The seller doesn't want to accept an offer which isn't backed up with the Buyer's pre-approval
  • and the other reasons buyers can get turned down for a home loan are vast and varied

It was an epiphany . . . or something like that.


The seller is NOT OFFERING FINANCING.  They won't be able to get you in the home today . . . unless you show them your pre-approval with your offer!

Posted by



Carla Muss-Jacobs has RETIRED effective May 1, 2018

Representing Buyers in the Portland Metro Real Estate Market | Clackamas Multnomah and Washington Counties | Since 1999

Carla Muss-Jacobs, REALTOR®, ABR, CEBA, ePro
Principal Broker/Owner ~~ INACTIVE

Carla Muss-Jacobs' retirement became effective May 1, 2018

Direct: 503-810-7192 


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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Ed Silva 09/06/2012 11:51 PM
Home Buying
Oregon Washington County
Dedicated Bloggers
Bartender, Make it a Double
first time buyers
obtaining a home loan
obtaining a car loan

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Larry Brewer - Benchmark Realty llc
Benchmark Realty LLc - Nashville, TN

Now I know why first time home buyers are so confused. I will say the the guidelines now are way out of line compared to common sense, as they were 7 years ago. Maybe some day the community reinvestment act will get the credit it deserves for crashing the housing industry.

Sep 05, 2012 09:44 PM #22
Carla Freund
Keller Williams Preferred Realty - Apex, NC
Raleigh - Cary Triangle Real Estate 919-602-8489

Hi Carla,

Good point! Buying a house is generally unlike anything a first time homebuyer has experienced.

Sep 05, 2012 09:47 PM #23
Fernando Herboso - Broker for Maxus Realty Group
Maxus Realty Group - Broker 301-246-0001 - Gaithersburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

This is a good explanation. . .and a reminder when you are kicking the tires. . you need to have your agent present!

Sep 05, 2012 10:52 PM #24
Amanda Christiansen
Christiansen Group Realty (260)704-0843 - Fort Wayne, IN
Christiansen Group Realty

I couldn't agree more Carla.  Get approved first!  Good post.                                                                                              

Sep 05, 2012 11:08 PM #25
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Carla, you are absolutely right! Buyers do have buying a car mentality. Why, because they don't know any better. Many buyers especially first time buyers have bought cars, but not a home. They need to be educated as to the home buying process. Great Post!

Sep 05, 2012 11:11 PM #26
Amanda S. Davidson
Amanda Davidson Real Estate Group - Alexandria, VA
Alexandria Virginia Homes For Sale

Carla- You are spot on. What a genius epiphany. What people don't consider when buying a car is they should be pre-approved before they go look at them too. Now, if I could just get a recording of your epiphany to play for my clients that don't want to be preapproved before we head out!

Sep 05, 2012 11:39 PM #27
Kim Mulligan
Cooper Jacobs Real Estate - Seattle, WA
Selling Homes for the 21st Century

We are experiencing an upturn in our market in Seattle and don't have enough homes for sale in certain neighborhoods. The first day of touring with clients I make sure and make mention of that. If you are up against 12 offers, 9 with pre-inspections, do you think you even stand a chance with no pre-approval letter?

Of course this is an extreme recent real life example, but multiple offers aren't rare. Working with first time home buyers means a lot of educating, but that's our jobs!

Thank you Carla for a great turn of a phrase. It clarifies a complex idea.  It's being added to my quiver!

Sep 06, 2012 12:00 AM #28
Sandy Acevedo
951-290-8588 - Chino Hills, CA
RE/MAX Masters, Inland Empire Homes for Sale

Hi Carla, nice post. Gradually it is getting better with buyers seeing a lender first. A while back this was almost unheard of. Keep getting the word out!

Sep 06, 2012 01:02 AM #29
Ed Silva
RE/MAX Professionals, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

Buyers especially first time buyers think that just because they pay a certain amount each month for rent, that the mortgage process is similar. Not. Buyers that don't know what their buying power may be just waste everybody's time. Good Post.

Sep 06, 2012 03:23 AM #30
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

I just had my laugh out loud moment for the day Carla.  I think I'm gonna ask next time I show a house "what can I do to get you in this house today?"  HAHAHAHAHA  This was great.


Sep 06, 2012 04:37 AM #31
Fred Sed
Fred Sed Group ~ Your Premier Orange County Realtors - Irvine, CA
Your Orange County Realtor, Why? Because Fred Sed

Great insight Carla! It's quite true. Sometimes I wonder though, whether it was just a formality to put the cart before the horse in the "Boom" years. "You're 98*? Sure, Here's money. buy whatever home you want. Knock yourself out!"

Sep 06, 2012 06:00 AM #32
Bruce Kunz
C21 Solid Gold Realty, Brick, NJ, 732-920-2100 - Howell, NJ
REALTOR®, Brick & Howell NJ Homes for Sale

A-HA!  Well said, Carla. Harder yet is to convince buyers to NOT buy the car (or really even look at anything) until after they've closed on the home.


Sep 06, 2012 06:56 AM #33
Evelyn Kennedy
Alain Pinel Realtors - Alameda, CA
Alameda, Real Estate, Alameda, CA


If only home loans were as quick as auto loans.  Our jobs would be so much easier.  But I guess that is what go us in the mess we had to deal with for the past 4 years.

Sep 06, 2012 09:03 AM #34
Cindy Westfall
Premiere Property Group,LLC Portland Metro & Suburbs Oregon - Tualatin, OR
ABR,GRI Your Tualatin & Portland Metro Real Estate

Hi Carla, Love those ephipanies (sp) ..and this one was sooooo good! Your analogy put this in perfect perspective for buyers to understand the importance of getting the loan approval BEFORE they start looking. Love it!

Sep 06, 2012 10:09 AM #35
Beth Paterson
Reverse Mortgages SIDAC, NMLS #173899 - Saint Paul, MN
CRMP, NMLS #342859

A good reminder and analogy.  The home loan process is so different.

Sep 06, 2012 01:29 PM #36
Doug Rogers
Bayou Properties - Alexandria, LA
Your Alexandria Louisiana Agent

I have a couple of hard working mortgage brokers that will field my sign calls on the weekend. Buyers NOT willing to speak with these professionals (or supply a loan letter) don't get in the front door.

Sep 06, 2012 11:53 PM #37
Renée Donohue
Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate - Las Vegas, NV
Las Vegas Real Estate Broker - www.urLVhome.com

It's all fun and games until you can't buy the home of your dreams :)

Sep 07, 2012 09:16 AM #38
Paige Walker
Paige Walker - Pineville, LA
Real Estate Guru - Alexandria Pineville LA

Yeah Carla!! That is so very true and I love the analogy.....Great Post!!

Sep 19, 2012 02:06 PM #39
Ginger Harper
Coldwell Banker Sea Coast Advantage - Southport, NC
Your Southport~Oak Island Agent~Brunswick County!

A lot of difference...and we are not used car salesmen either


Sep 20, 2012 01:09 AM #40
Jessica Lorene
Trout Lake, WA

Such a simple concept, and you communicated the comparison perfectly.

May 16, 2013 08:34 PM #42
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