Most people in America think that owning a home is part of the American Dream. That is true, but the process of buying your first home can seem rather daunting. Fortunately, the home buying process is made easier when you choose a good realtor and lender.
By working with an experienced real estate agent and mortgage lender, you can get a home that works well for you personally and is within your budget. Below is more about why it is important to work with skilled professionals in real estate and lending during your home buying process.
How A Good Mortgage Lender Helps You
Most real estate experts advise that the mortgage lender is the person who you should meet before you do anything else. The reason for this is that which home you buy entirely depends upon how much mortgage you can be approved for. A good mortgage lender is going to review your financial qualifications and documents and will help you to determine how much of a home you can buy.
There is no point to look at $400,000 houses with a real estate agent if you are only approved for homes worth $250,000.
A mortgage lender will review the following items to determine how much of a loan you can be approved for:
- Credit score – If you have a 620-credit score, you will only be able to get certain types of loans, such as an FHA program. If you have a 740-credit score, a conventional loan is a possibility.
- Income level
- Debt to income ratio
- Past negative credit events, such as a foreclosure or bankruptcy
- Down payment – If you have a 20% down payment, you have different mortgage loan options than if you have a 5% down payment
Your mortgage lender will also help you to get a pre-approval letter. This letter shows that you have been pre-approved for a certain level of loan. It tells real estate agents and home sellers that you are a serious buyer.
A pre-approval letter will require the lender to verify your credit score and income level. They will look at your credit profile and your w-2s, tax returns and paystubs, and make sure that you have the financial ability to pay a certain level of mortgage.
Many home experts believe that there is not a lot of point to go looking at houses unless you have already been pre-approved by a lender. For this reason, it is a good idea to speak to a mortgage lender before you actually talk to a real estate agent or even look at homes.
How a Good Real Estate Agent Helps You
After you have been pre-approved for a mortgage, it is time to find a real estate agent to help you find a home that suits you.
A good, experienced real estate agent who is experienced with home buyers will make your home buying experience go more smoothly. Your buyer’s agent will go over the needs and wants you are looking for in your new home. He or she will know what your price range is and your various requirements. If he is an experienced agent in the geographic area you want, he will probably be able to quickly find you several potential houses that may suit you.
Your agent will preview the potential properties to ensure that you only spend time looking at homes that meet your financial and personal requirements. The agent will arrange all of the viewings and will walk you through each home. When it comes down to negotiating the deal, an experienced real estate agent will be able to help you make a fair offer on the home.
Real estate agents have access to the local MLS home listing service. They know what each home in the area has sold for in the recent past that is similar to yours in size and features. So, he will be able to craft an offer that is fair to you and fair to the seller.
Your real estate agent will also know specific features about the neighborhoods you are considering. He will be able to tell you if a particular neighborhood is good for you or not. For example, if you have two young children, you may not want to move into an older neighborhood where most of the home owners are retired couples.
Most home buyers find that working with a highly experienced real estate agent in their particular area is well worth it. Also, note that in most cases, the buyer’s agent is paid by the home seller. The commission is paid out of the closing costs paid by the seller. So, for the most part, you can enjoy the benefits of a good real estate agent without paying for it directly.
Last, your real estate agent will be able to work smoothly with your mortgage lender to get the deal to the closing table fast.
The Bottom Line
Engaging with a good mortgage lender and real estate agent when you buy your first home is very important. You should do your research to ensure that you are working with two good professionals who have plenty of experience in the home purchase process.
References: Homebuying Tips. (n.d.). Retrieved from http://time.com/money/4291378/homebuying-tips-mortgage-real-estate-agent/