Ever contacted a real estate agent and one of the first questions they ask you are, “Are you pre-approved for a mortgage or will you be a cash buyer?” And has that kind of ticked you off? I mean we have barely spoken, and you are asking me such a direct question!!!!
Well, there are many reasons we ask that question, and sure, HOW we ask it can be phrased any number of ways. But, keep in mind, that a real estate agent never gets paid until you close on a home or condo. So if we are out showing you homes, and THEN you go to get your approval on a mortgage, the process may get derailed by something…..and those somethings can be anything. Income, length of time on your job, and of course your credit. Now, you don’t get to buy the home, and we don’t get paid. Now, I’m not trying to say that the agent’s interest comes first, but we do run a business, and we have to make business decisions to work with Buyers that are qualified to buy.
I also like to tell my Buyers, that the last thing I want to do is show you a $250,000 condo when you can only afford a $200,000 condo. You will now have your heart set on the one you found, but through the loan approval process it’s determined you can’t afford that much, or you decide you don’t want to SPEND that much. There certainly IS a difference between the two.
Now, I’m not a loan officer or lender. Let me be very clear!!! I’m here to help you FIND the right home, PAY the right price, and help you through all the steps along the way. It is your loan officer that will be the one to assist you in getting your financing. So, this is why I want you to have this process well under way (that is another way of saying having your pre-approval letter) BEFORE you start looking at homes. Would you buy a car, if you did not have a driver’s license?
Today, I read an article in the New York Times (I’ll link to it below, but you may have to have an online subscription to read it) that Fannie Mae is going to start taking a longer view (look) at your credit history when looking at your mortgage application! What does that mean? Right now, Fannie Mae require a “tri-merge” credit report that takes information from all three credit bureaus….TransUnion, Equifax and Experian. But, when they do that, it’s a “snapshot” at that moment when your credit is pulled.
This new process, or trended data product, will go back some 30 months, showing your payment history, if payments were made on time, and whether borrowers tend to carry balances, or pay off balances in full.
So, it’s going to be important for you to have that pre-approval in place and your loan officer has all the documents they need for that approval. A Focus On Credit History in Your Future Real Estate Purchase is going to be very important!
Then, we will be able to look at homes, knowing you are comfortable with what you can spend, and, have a pre-approval letter to attach to your offer, giving the Seller confidence that you are in fact, ready, willing and able to buy their home!