Congratulations – you found the Buyer Agent you want to work with and you have had your Buyer Consultation and gone over the Buyer Agency Agreement! But before you go out and look for houses, you need to make sure you are pre approved for a mortgage!
Why should you get pre approved before you have even found the house? There are lots of reasons why!
You Don’t Want To Lose Out on Your Dream Home!
In today’s real estate market in Richmond, homes in most areas are going under contract very very quickly, sometimes in the first day or two! And many of these transactions have multiple offers on them! If the home you find is the one that just came on the market, is priced well and potentially has multiple offers on it, you want to make sure you are able to make a strong offer on it! Part of a strong offer is a strong pre approval letter from your lender! You definitely don’t want to lose out to another buyer who has already gotten their strong pre approval letter while you are now scrambling to get the lender letter!
You Want To Know The Price and Terms You Are Comfortable Paying!
When you are buying a house, you are most likely going to have a mortgage to pay! There will be a monthly mortgage payment that you are comfortable making each month. Talking to the lender and knowing what that price is that gives you the monthly mortgage payment you are comfortable with ensures that you won’t look at houses priced above your comfort level!
You Want To Know Your Upper Price Limit!
By knowing the maximum price that you qualify for means that, if you aren’t finding homes at the price point you are comfortable with, then you can potentially bump up your price, as long as you qualify! For instance, if you are comfortable with a price of $300,000 but you qualify for $350,000, if you are not finding the home you want at $300,000, then you can choose to continue looking until you find something at $300,000 or under, or you can choose to bump up your price a little bit at a time, to say $320,000! The choice is yours!
You Need To Know How Much Money You Will Need For Closing!
If you are a first time home buyer you may have limited funds available. Sometimes we are able to negotiate the seller paying some or all of your closing costs, but there is no guarantee. Talking to the lender will let you know how much money you will need for closing, which then allows us to determine how to structure your offer on the house! Perhaps you need the seller to pay closing costs – we need to know that to put in the offer! Perhaps you are only above to do a minimum down payment – we need to know that! If it turns out that you won’t have enough money at this time to make your move, you need to know that so that you can perhaps put off looking at houses for a little bit longer!
You Need To Know What Type of Loan You Will Be Getting!
Different types of loans will have different requirements! And there are lots and lots of different loan options out there for a buyer to choose from. There is FHA, VA, Conventional, Fannie Mae, USDA Rural Development, VHDA for first time home buyers, jumbo loans for high end buyers, down payment assistance programs, etc! Not all lenders offer all the loan options, some lenders are better for one type of buyer such as a first time home buyer than another lender may be! There are some lenders who have in house loan programs that other lenders don’t have! And appraisal guidelines may be different depending on the type of loan! Knowing the type of loan you are getting before you begin to look means that we can keep those loan requirements in mind when looking at homes to make sure the property does comply with those requirements!
Remember to Ask About Down Payment Assistance Programs!
If you are a first time home buyer, there may be grant money to assist you with your down payment on a house! It can also help to cover some of your closing costs! And, with interest rates at a higher level than they have been previously, these could also help you buy down your interest rate! But these programs all have some qualifications, so make sure when you are talking to the lender that you ask about these programs and find out if you qualify for them!
Should you shop around for a good lender? Yes! Different lenders may charge different fees and interest rates and loan programs and options for you! Talk to at least 2 lenders! And if you don’t know a lender to talk to your Buyer Agent should be able to refer you to someone!
Questions about the loan process? Have questions about buying your first home? Need a good referral? Feel free to contact me and we can sit down and talk – no obligation, no pressure!
