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Have You Spoken with a Lender Yet?

By
Real Estate Agent with Brown Realty, 210-789-4216, TREC #0492321

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.

 

Meeting a Mortgage LenderAll 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.

 

This post is an entry to the contest Winning over the Naysayers.

Comments (59)

Shirley Coomer
Keller Williams Realty Sonoran Living - Phoenix, AZ
Realtor, Keller Williams Realty, Phoenix Az

Hi Jerry.  Nice post and spot on.  If often find buyers are surprised to see what information is on their credit report and may need some time to dispute something or get information corrected.  It also surprises buyers who previously bought a home 8 - 10 years ago what is now involved in buying today!  I always ask if the buyer has talked to a lender as well.  Can you imagine her disappointment had she fallen in love with a home out of  her price range? (not to mention the waste of your time and resources).

Feb 19, 2016 11:05 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Excellent advice here, Jerry Newman ... and as a Mortgage Originator I so appreciate it being provided to the public.  With the reasoning provided, it sets the tone for a prospective buyer's contact with me.  With all the info out there surrounding this step in the home buying process, you would think that everyone was aware.  They are not ... so posts like yours serve a great purpose.

Gene

Feb 19, 2016 11:15 PM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good Morning Jerry Newman -  This is a well laid out case for getting pre-approved.  I know that it is sometimes difficult to explain that to some.

Feb 20, 2016 01:02 AM
Libby Cousins
Extraordinary Processing - Spokane, WA
Contract Mortgage Processor, licensed in WA

As they say "Time is money". You are not only saving your valuable time, but the consumer's time and a potential emotional letdown. Finding and going through the loan process to buy a home is stressful enough for even the most qualified buyers these days. It saves everyone by making sure that buyers get qualified. I sure appreciate working on purchase loans that have been pre-approved. Those even sometimes end up getting denied, but at least the loan officer has tried to mitigate that potential upfront. 

Feb 20, 2016 06:57 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Hi Jerry... great post. Always one of my first questions when dealing with a prospect - "have you spoken with a lender." If the answer is no, I get them to a lender asap. And if they resist, that tells me they aren't very serious buyers.

Feb 20, 2016 08:40 PM
Olga Simoncelli
Veritas Prime, LLC dba Veritas Prime Real Estate - New Fairfield, CT
CONSULTANT, Real Estate Services & Risk Management

Jerry - good reminder, hope buyers read this. It's good for them to know upfront what they can or cannot afford and for us to know that we're not wasting our time taking them around. Also good to be ready with a pre-qual or pre-approval letter if something perfect comes along.

Feb 20, 2016 10:12 PM
LUXURYSOCALREALTY COMPASS La Jolla
Compass - La Jolla, CA
San Diego Partner - The Private Client Network

Hi Jerry excellent advice regarding pre approval before physically looking at property

Feb 21, 2016 12:10 AM
Macy Babb ... North Georgia Realtor
Re/Max Around Atlanta Realtor - 404-234-6166 - Cartersville, GA
Realtor, SFR, HUD/REO Certified

Great Info... Coming from the mortgage side and now strictly Real Estate... I too, stress to buyers, I cannot truely help you if you have not spoke to a Lender, things are different from years back, and it is tougher than some believe, and easier than some think as well

Feb 21, 2016 06:12 AM
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Congratulations on the featured post. Home buyers in your area should call you. 

Feb 21, 2016 08:14 PM
Jerry Newman
Brown Realty, 210-789-4216, - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Thanks, Tony and Suzanne Marriott, Associate Brokers I appreciate the reblog, and we do need to let more buyers know about the new process in Owe Before You Know.

Feb 22, 2016 02:03 AM
Jerry Newman
Brown Realty, 210-789-4216, - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Yes, Shirley. To avoid all those surprises on a credit report, buyers need to actually know what's been recorded, so actually speaking with a lender and having him to pull their credit will make them more prepared, and give them time to address anything that comes up that they were not aware of.

Have a Great Week!

Feb 22, 2016 02:05 AM
Jerry Newman
Brown Realty, 210-789-4216, - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Thanks, Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi It seems that agents and lenders like yourself are always educating buyers about the home buying process. Have a Blessed Week!

Feb 22, 2016 02:07 AM
Jerry Newman
Brown Realty, 210-789-4216, - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Yes, Grant. Sometimes buyers don't want us to bring up this topic, but we need to put the horse before the cart. It's beneficial for all concerned.

Yes, Libby. Time is certainly important to both the agent and the buyers. I have had a few of those pre-approvals not work out, but at least the loan officer made the call, and offered to work thing out to fix those credit issues.

Nina, If they resist, they are definitely not serious buyers. Only those who have done the home work are ready to move forward.

Hi Olga, I am hoping more buyers will read and get to a lender first, but when we ask that Magic Question, we know where to direct them if they haven't spoken to a lender.

Thanks, Joy. I appreciate your comments and visit today. Have a Great Week!

Hi Macy. You do have a wealth of knowledge, having worked in the mortgage side and not as a real estate agent. I know you'll lend them in the right direction.

Thanks, for the Shout Out, Gita Bantwal May You  Have a Blessed Week!

Feb 22, 2016 02:15 AM
Susan Hale
Re/Max Realty of Defiance,Inc. - Defiance, OH
Re/Max Northwest Ohio Realtor

Jerry,

I agree with everything you mentioned in your blog.  Here is another reason for a buyer to know their financing options: I always tell buyers that a letter of bank preapproval accompanying an offer puts more power behind the offer telling the seller that the buyer has done their homework.  Should a multiple offer situation arise and the other buyer hasn't been to the bank then more than likely the seller will respond to the offer with the preapproval letter attached also.  Another thought is to have buyers not only find out the amount they can borrow but what TYPE of loan.  Government mortgages require properties to meet certain condition requirements.  

Feb 22, 2016 03:03 AM
Andrea Bedard
Thompson Company, REALTORS® 240.593.2860 - Silver Spring, MD
Fluent in Real Estate & German, M.A. ABR ASP CIPS

So true Jerry Newman and often we can win those nay-sayers over by educating them! I have - learned the hard way - that there is usually a reason when customers are reluctant to talk with a lender. It's best business practice, not only for ourselves, but the seller & listing agent as well, to only bring qualified buyers to tour a home!

Feb 23, 2016 11:22 AM
Michael Kaim
Berkshire Hathaway HomeServices Professional Realty - Mentor, OH
Real Estate team serving the Cleveland Area

Very interesting post Jerry Newman 

Feb 23, 2016 07:20 PM
Anna Hatridge
R Gilliam Real Estate LLC - Farmington, MO
Missouri Realtor with R Gilliam Real Estate LLC

Coming over from Praful Thakkar  re-blog.  Great post.  I have spent the last 3 months education buyers about debt to income and how it makes a big difference in what they can buy.  Seems to be paying off.

Feb 24, 2016 02:08 AM
Christopher Lotte
Coldwell Banker - Lithopolis, OH
Central Ohio Real Estate Agent, 614-390-9243

Great post, thanks for sharing Jerry Newman 

Feb 24, 2016 08:15 PM
Debra B Albert, PA - Keyes Realty
Keyes Realty Treasure Coast, 34986 - Port St Lucie, FL
Ron and Debbie 772.708.3292

Jerry, another great blog and most definately on point!  We run into the same issues.  Things change in the mortgage markets and real estate markets daily.  I often think, "As Soon as I Really Know It - It Changes" - Yep - that's real estate!

Feb 26, 2016 11:06 PM
Fred Griffin Florida Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

"No, but I know I won’t have any problems."

    How many times do you hear those words?  Ug!

Mar 17, 2016 09:31 AM