Early on in my career I heard the quote, “Home buying is a process, not an event.” I don't recall now who said it so I can’t properly credit the quote, but I've heard it repeated quite a bit. It’s since become my mantra when explaining the process to buyers. I’ve broken the process down into five steps for my own business and I use these steps to help clients better understand what to expect during the process. The five steps are securing financing, touring homes, writing and submitting offers, conducting a home inspection, and closing the transaction. This week we’ll focus on step one, Securing Financing.
If you intend on financing your home purchase, it’s imperative that you first speak with a mortgage advisor to discuss financing options. In most cases, an assessment of credit worthiness will be conducted and a review of financial documents such as tax transcripts, pay stubs and bank statements will be used to determine if and for how much you may qualify to borrow towards the home purchase. You will also be educated on the different types of loan products available such as conventional, FHA or renovation, and the minimum required down payments associated with each. Once you have been approved, you will be given an estimate of fees associated with the loan as well as a letter stating you have been pre-approved for a mortgage. That letter might list conditions for loan approval and will prove very important when you’re ready to write an offer. The estimate of fees you will receive will also give you an idea of how much you might ask the seller to contribute to help offset those costs at closing, hence the common reference to seller-paid closing costs.
The main reason for securing financing as the first step is so you and your real estate professional will know the highest amount for which you qualify and will be able to narrow the search to meet that criteria. Another key reason is that most sellers will not consider your offer if there is not an accompanying letter from the lender. That is certainly the case with most foreclosed property such as that owned by private banking institutions, HUD, Fannie Mae, Freddie Mac and other distressed property asset managers. If you are to gain a competitive advantage in the current market, your home search must begin with securing financing.
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As always, we recommend that you contact a lending institution with which you have a prior relationship. If you do not have an existing relationship with a lender, you can receive a list of preferred mortgage advisors and have your questions answered by contacting my team at info@idealrealestateprofessionals.com.
iDeal Real Estate Professionals, LLC is owned and operated by Brandon Bramlett and C. Mark Willix and is affiliated with Maximum One Realty Greater Atlanta. For personalized service visit us at www.idealrealestateprofessionals.com. You can also email us at info@idealrealestateprofessionals.com.