The First Step in Purchasing a Home
In trying to decide what to write a blog on this week, I googled “Real Estate Questions”. This post is dedicated to the first questions that came up…What is the first step in purchasing a home?
Studies show that most home searches begin online. SNL did a very funny skit last weekend about our obsession with looking at homes on a popular property website. Viewing homes online can be a lot of fun. I love to look at homes. What takes that obsession from a pastime to a reality is finding a lender and getting pre-approved for a home loan. Until you know how much you qualify for and how much your monthly payments will be based on that qualification, you’re really just dreaming. It’s like knowing your credit card limit before you go shopping. You can’t just go and buy anything.
The process is fairly simple, and any good lender will let you know what information they will need to get you pre-qualified. The pre-approval can be completed in a short amount of time, but it is very crucial to your home search. Most real estate agents won’t show you homes until you have a pre-approval letter from your lender. This letter is needed when you submit an offer on any home unless you are purchasing with cash.
I know there are national companies and banks out there that say they can get you pre-qualified for a home loan on-line in a matter of minutes. I can also tell you that as agents, working with lenders from those companies and large banks can be a nightmare, here’s why. Your file can be handled by someone in a call center in the middle of the country. They know nothing about Sacramento or whatever market you are buying in. For an agent, the hardest part of working with them is communication. It sometimes takes them days to return an email or phone call because they are handling so many transactions. I write this from personal experience. Because of this, many listing agents will stipulate that they will only look at offers from buyers who are working with a local lender. There are some online services that do work with local lenders. If you choose to go down this path, I would ask them if they do.
One of the best ways to find a good lender is to ask a local real estate agent you plan on working with for a referral. Working with lenders is an essential and foundational part of our business. We work with lenders every day and on every deal that we do. Randall and I have lenders we are happy to refer clients to. The lenders that we work with have a large number of loan options. I don’t want to get into the weeds here but having a lot of options is great for a buyer. A lender can shop your file to a number of lending institutions and in the end get you the best deal. We use brokers instead of banks because banks are limited on their loan options. As a simple example, a bank may have 4 loan options they can offer. A broker may have as many as 80. In the Sacramento real estate market, we encourage buyers to work with local lenders. Because our market is so competitive, every advantage helps when putting in an offer and a lender can be a great resource. Think of your lender as the foundation to the whole buying transaction. They work with you to secure the loan that will ultimately get you into your home. A lot of what they do is behind the scenes but they are very important.
With most homes currently receiving multiple offers, a lender that will reach out to the listing agent to let that agent know how qualified their buyer is and to answer any questions that agent might have is a great advantage. A lot of what we do in the real estate business is based on building relationships. A good lender will do everything in his power to build that relationship with the listing agent to help you. As an agent on a listing, knowing I have a lender on the other end of a deal that will answer their phone or respond to an email when I reach out makes all the difference in the world.
If you are thinking of taking that step from casually looking at homes to becoming a serious buyer, please feel free to reach out with any questions. I'm alway happy to help.