You stumble upon a home for sale. It’s in an ideal neighborhood and the floorplan is great! You talk with the realtor and find out the price is affordable. So, you tell the realtor that you would like to make an offer. The realtor is excited for you, but you are informed that you are unable to make an offer until you get prequalified by a lender.
GOOD NEWS! You know about Stewardship, so you give us a call to get prequalified. In one simple phone call, we can give you a short education and ask you enough questions to get you pre qualified for this home. We put together the prequalification letter and send it over to the realtor. The offer to purchase with the prequalification letter is sent to the seller of the home, and after some negotiation, you and the seller agree on terms. You are officially in contract to buy a home! Congratulations!
There is a problem. You engaged in the number one mistake people make when buying a home. Can you identify it? If you can’t, do not worry. It is the number one mistake for a reason. Most people have no idea they make it.
The mistake? Starting the conversation with a local mortgage broker just before you make an offer on a home.
We are thrilled to chat with anyone looking to buy a home no matter where they are in the process. Buying a home is a lot of fun and being a part of that excitement is a blast! We are very good at what we do, so we are always able to make the most of a situation. Even if you start the conversation with us just before making an offer.
Don’t get me wrong, talking with a lender (ideally a local mortgage broker) before making an offer is better than waiting until after, but most good realtors will require you to do this before making the offer anyway.
There are three reasons why connecting with a lender later on rather than earlier in the process is a mistake:
1. Adjustments to Your Assets
Buying a home takes money. Although you are able to purchase a home without a downpayment (VA and USDA loans), not all people or properties qualify for these programs. As a result, the proper plan with your assets can help structure the loan for the home purchase to be better.
Here is an example: Most people think you need to have 20% down to buy a home. Not only is this not true but, as we have mentioned before, it may not be what is best for your overall financial picture. Meeting with a home loan advisor earlier on can help determine which down payment option is best for you.
2. Adjustments to Your Credit
You do not need perfect credit to buy a home, but there are differences in the interest rate you can get on a mortgage based on the credit score you have. In almost every case, there is a very small adjustment someone can make to their debts that can increase their credit score to the next tier to get a better interest rate on a home loan. The downside to these credit adjustments is they take a few months to be reflected on your credit. As a result, it is typically too late to make those adjustments if you are already in contract on a house.
3. Managing Expectations
Again, buying a home is A LOT of fun. There is so much excitement. But there is also some anxiety. Meeting with a home loan advisor earlier in the process can help manage these emotions. A wise and loving advisor can educate you about a few home buying details so you know what to expect. When buying a home most people ask, “Do I need to do anything?”
and “What’s next?” Meeting with a mortgage pro earlier can help answer these questions, giving more peace and confidence as you go through the home buying journey!
It might seem weird that something as simple as this is the number one mistake people make. It might seem like there are several other bigger mistakes that could cause more issues, and you are right. But meeting with a home loan advisor early in the buying process helps prevent these big mistakes you are thinking of.
Meeting with our team of home loan advisors is always free! Don’t make the mistake of starting the conversation later in the process. It doesn’t matter if you are five days or five years away from buying a home. Creating a home buying game plan sooner rather than later is always a great idea.