Before you go out into the field to search for your home, before you make a phone call to a real estate office or a Craigslist ad, know your mortgage qualifications. To my mind, not preparing in this way is a recipe for disaster.
1. You can make better decisions. When you are prequalified you know your “limits.” This helps you decide if a house is right for you based on monthly payment. Just because it has sufficient bedrooms for your needs, the two car garage and the fireplace you desire, doesn’t mean it’s the right house for you.
If you can’t afford it, you can’t buy it.
Your mortgage professional should be guiding you in advance by providing benchmarks to help you determine the monthly payment on a house. Better still, your mortgage person should be available to answer questions and calculate monthly payments when you’re most likely to be out and about: evenings and weekends. My clients know they can call me while they’re standing in the kitchen of a prospective house to ask me to run the monthly payment/downpayment figures.
When you are prequalified you know how much cash you will need to buy a particular house: both for the downpayment and closing costs and for the monthly payment. If you find the “right” house, and you know your financing information, you will be certain it is the house you can buy.
2. Experienced Realtors will work with you. It’s true you can call forty-seven different real estate offices, speak to twenty-three different real estate agents and make appointments to see twelve houses next Saturday. That’s easy to do.
Consider how much of your time you might be wasting making those appointments if you’re not qualified.
You’ll look at houses that you’re not qualified to buy. You’ll fall in love with the huge living rooms and the formal dining room and the finished basement. Then, two weeks later you’ll discover you’re not qualified for the loan to buy that house. How discouraging will that be? That’s huge! You might not even want to go out and look at homes again! A letdown like that can really ruin your day and make this homebuying experience more difficult and heartbreaking than it needs to be.
Inexperienced real estate agents probably won’t even ask you if you’re prequalified. The agent is happy to have a customer. If you’re not prequalified you’ll waste your time and the agent’s time.
An experienced agent won’t make any appointments if you’re not prequalified.
Don’t take it personally, in fact, you should mark it as a sign of professionalism. Further, that’s an agent you WANT to work with! That’s the sign of an experienced agent who will listen carefully to your requirements of the house you wish to buy. This agent won’t waste your time showing you homes that you’re not the least bit interested in. How do you know this? Because she has already demonstrated her unwillingness to waste your time.
This is an agent who wants to spend her time carefully. She wants to sell you a home and earn a living!
When you are prequalfied and you call real estate offices, this is the kind of agent you need to speak with. Use your mortgage prequalification as a test. If an agent doesn’t ask you that most important question, “Have you been prequalified?” hang up the phone. Your time is too precious to waste; this is the biggest purchase of your life! Buying your first home is too important to you and your family to waste time dealing with inexperienced agents.
It is not only the home-searching which can be frustrating when you work with inexperienced agents. There’s so much more that’s invovled in buying a home, and so many things that can go wrong. Experienced agents watch out for problems from the beginning.
Ask yourself, “Do I want to spin my wheels working on a home purchase that might never actually happen?” Just because you found the house, agreed on the price, and had a good engineer’s report doesn’t guarantee you’re getting the keys to the house. What happens if the agent calls you up one day and says, “Oh, I have some news. The Seller can’t close for another three months because their house down in Florida isn’t ready yet.” WHAT?
An experienced agent would have asked these questions from the get-go. Why? She doesn’t want to waste her time!
So, before you make that call to a real estate office, get prequalified for mortgage financing. Getting prequalified helps you make better decisions about the house and the Realtor you choose to work with to buy your first home.