Many buyers (even ones who’ve bought houses before) start looking for a house online, going to open houses, calling agents when they see “for sale” signs on the lawn.
However, it’s not the best thing to do. It’s like putting the cart before the horse.
What they should do is hold their horses and get pre-approved for a mortgage before even starting to look for a house at all.
Whether it’s your first house or your twenty-first house, the first thing you should do is get pre-approved for a mortgage. (Unless of course you have cash, and if that’s the case then you know exactly how much you can spend and can give yourself the permission to spend it.)
Looking at houses without knowing that you qualify for a mortgage, and for how much, can be a waste of time as well as a total letdown in the end. So, get pre-approved so you know what you can look for, and then go find the best house you can within your budget.
Besides, when you do find a house you’d like to make an offer on, the listing agent and owner will want to see that you are pre-approved for as much as you are offering. Not having one to present to the seller wastes valuable time in a competitive market. It can also make you look unprepared, which can affect whether they feel comfortable accepting your offer.
Getting “pre-approved” doesn’t take much time. You can do it online, but it’s better if you actually speak to a mortgage professional either on the phone or face to face. You’ll need to provide them with information about your employment, assets, and debts, so before you contact one, make sure you have a decent grasp on those things. They’ll also run a credit check, so you’ll need to give them some personal information and allow them to do it.
One of the biggest concerns and hurdles many renters have about becoming homeowners is the need for a downpayment. Many feel like they have too small of a down payment and couldn’t be approved for a mortgage because of that.
Don’t sweat it if you only have a small down payment…
True enough, for the most part you need to have some money saved to use as a downpayment and for “closing costs.” But it doesn’t usually have to be 20% of the purchase price like it once was. That kind of down payment can be required for some buyers, depending upon their situation, but many buyers — even ones who are not buying their first house — put less money down.
Sure, the more you put down, the lower your monthly payment will be. But waiting to buy until you save up more money can actually cause more harm than good. It can be tough saving up enough money to make much of a dent in the monthly payments, especially when mortgage interest rates are low. And if house prices are going up, you could literally lose money by waiting and saving money.
How much money you have on hand will affect how much you are approved for and what kind of loan makes the most sense for you, but there are plenty of options out there.
Make sure to ask your prospective lender to recommend the best loan for you and your situation. They should be willing, able, and glad to explain the different options to you, but sometimes they don’t think to give you all of the options when you call for a pre-approval. They just crunch the numbers and give you a basic pre-approval. So, make sure to ask during that phase of the process. The earlier you know all of your mortgage options, the better decision you will be able to make.
Here is a list of local lenders I recommend. I always recommend using a local lender as opposed to a big commercial lender due to relationships with local appraisers. It will work in your favor, trust me.
- Amber Moser – Thrive Mortgage
- Isela Hughes – Nexa Mortgage (Spanish speaking if needed)
- Emily Rainwater – Centennial Bank
- Lauren Chambers Pro Mortgage – 816-585-6067