The Age Old Question: Who is Chosen First? The Agent or the Lender?
It is kind of like the chicken and the egg to the consumer isn't it? This was a question that came up on a Zillow question thread over the weekend. I am sure that it has come up many times before and will likely be a topic many times after. What I found was interesting was the variety of responses to a buyer that simply asked,
"Where do I start if I want to buy a home?"
The agents jumped in and spouted off their credentials. They blustered about their "network" of great lenders and how choosing an agent first is best.
Then the lenders jumped in... and said that they can refer the best agent in the market area and of course, you guessed it, it is best to start with the lender first.
What is a consumer to do? Whether you are buying or selling, either way can work. My suggestion was to talk to a lender first. Only because if a buyer has already been to the lender and have been pre-approved for the loan, they are ready to look at homes. Step one, completed. But, if a buyer calls me today and has not been to a lender yet, that is still the first piece on the path to home ownership, in my opinion.
There is no point in guessing what a buyer can afford. You can go online and use all of the mortgage calculators to try to figure out what you want to spend. But the criteria the lender uses is not what you think you can afford, but what they feel comfortable lending you based on your risk factor. Especially if you are looking to take advantage of a program that requires little to no money down, your debt to income levels needs to be within their guidelines.
Looking at homes with a pre-approval is setting a buyer up for a heartache. No point in looking at homes that are too expensive and then the buyer is disappointed with the options that ARE available in the price that they want to spend. (The old saying about champagne taste and beer budget comes to mind here!) It isn't about what the bank says you are approved for, it matters what the buyer wants to pay every month for their new home. A buyer has a comfort zone and it may not be at the tippy top of their approval letter. But it is nice to know that if they find a home that they love, they have a little extra wiggle room!
Whether you start with a lender or an agent, interviewing more than one to find someone that you feel comfortable working with is the key. This is true for a lender and certainly for an agent. Both are needed in order to make your transaction work smoothly. You will be working with these people for several months...to purchase one of the largest investments that you will ever make. It is often not an easy decision and you want to be sure that you have someone that will answer your questions with a smile and justify the price that you want to pay when the time comes to negotiate with the seller.
I would love the opportunity to interview for the job of representing you in your pursuit of home ownership! You can reach me on my website at www.KarenFeltman.com or give me a call at 319-521-0701. I will meet with you one on one to discuss the home buying or selling process in a consultation meeting that is free of charge and obligation.