Many homebuyers want to jump into the home search as quickly as possible. Beautiful online photos and For Sale signs in great locations can tempt anyone who’s had moving on their minds. But before you spend too much time online home-hunting and planning showings, consider these important reasons to meet with a lender first.
You’ll Set a Realistic Price Range of Affordability. Many of us like to think we’ve done the math properly on what we can afford in a new home. Lenders are experts at reviewing your finances and setting a realistic range for the interest rate you can receive from their institution. They’ll also explain what loans you qualify for vs. which ones you don’t. With this information in hand up front, you won’t waste time looking at homes that are out of your price range.
You Could Improve Your Position with Sellers in Multiple Offers. Anyone can make an offer on a home. But sellers want to know that you can actually get through the loan process hassle-free so that the deal goes through and they can move on. Getting preapproved shows that you can afford the offer you’ve made, which puts you ahead of competing offers who have yet to get a lender’s backing. Also important to note, some of the best Realtors® will expect you to have preapproval soon after meeting you if they are going to spend their time working for you.
Lenders Can Help Create Action Plans for Improving Your Credit. A lender can help understand how to improve a lower end credit score so that you can get a better interest rate. Once a lender has all the information on your financial history, he or she can show you a path to paying off debt and increasing your score.
Lenders Help Figure Your Minimum Down Payment. A down payment is critical to knowing your initial outlay of cash as well as how low you can get your monthly payments. Lenders can show you the difference in down payments with regard to FHA and VA loans, as well as conventional ones. A larger down payment of 25% to 30% lowers the lender’s financial risk, making your application more appealing. But FHA loans, for example, require as low as 3.5% down payment if you qualify.
A Lender Will Help Demystify the Loan Process. Even for experienced homebuyers, the loan process can feel lengthy and tedious. Meeting with a lender in advance of home hunting helps set expectations of what paperwork and documentation you’ll need to secure a loan, as well as how mortgages go through underwriting. You’ll have time to get “mortgage ready” and understand the timing of the process.
You Can Comparison Shop in a Short Period of Time. Meet with more than one lender to understand the different products they offer and which one benefits you the most. Just be sure to meet with your prospects in a relatively short period, such as two weeks, as they’ll need to pull your credit. Too many credit pulls can “ding” a credit score, unless pulled close together for the same purpose.