When buying a house, many first-time buyers believe that the first professional they should call is a real estate agent. They are wrong. Oddly enough, finding your dream home isn’t typically the best way to start your journey to homeownership. So what is the first step to buying a house?
The First Step to Buying a House
According to Forbes, finding a property before connecting with a lender is the top mistake that first-time homebuyers make. Why is it wise to contact a lender before you begin your hunt for the perfect property? Working with a lender from the start can provide a would-be buyer with several useful advantages . . .
Identify and Correct Credit Issues
A variety of factors go into crafting credit scores, and those three numbers can have a major impact on both the loan options that are available to you and how much it will cost you to borrow money. As Realtor.com points out, one of the major advantages of meeting with a lender before you begin searching for your ideal home is that the lender can provide you with a knowledgeable assessment of your credit.
What shape is your credit in? Is it good enough to secure the home loan that you want? Are there things that you could do to improve your credit to qualify for a better interest rate? Are there errors on your credit report that are dragging down your credit score?
Explore Financing Options
As DoughRoller reports, mortgages are not one-size-fits-all products. There are numerous home loan programs and products available, and they all come with their own pros and cons. Should you opt for a conventional loan or a government-backed program like a VA loan or FHA loan? Is a fixed-rate loan or an adjustable-rate loan better for your situation? How do the various loan programs impact the requirements for a down payment? What about closing costs? A reputable lender can steer you toward the loans that might fit your needs and educate you about their respective advantages and drawbacks so that you can make an informed decision as you work to secure the financing needed to buy a home.
Develop Realistic Expectations
It’s heartbreaking to fall in love with a house before discovering that it’s out of reach. Knowing how much you can truly afford to spend on a house allows you to focus on properties that are within your price range, saving you time and aggravation. How do you know what size mortgage you can actually afford? As NerdWallet makes clear, meeting with a lender and getting preapproved will give you a solid estimate of what you will likely be able to borrow.
Enjoy a Stronger Negotiating Position
Knowing your budget isn’t the only advantage of getting preapproved by a lender. It may also put you in a stronger bargaining position when you do find the home that you want. According to The Balance, having a letter of preapproval indicates to real estate agents and sellers that you are a serious buyer who can get the necessary funding to purchase a home. In a situation where a seller has multiple bids to consider, preapproval can make the difference between your offer being accepted or passed over.
Speed Up the Approval Process
Meeting with a lender before you start shopping for homes can also speed up the process of getting approved for a home loan (source). After all, it gives you a chance to learn how the process works and what documentation you’ll have to provide. Getting preapproved also gives you a head start on the actual approval. The lender will collect much of the necessary information while considering you for preapproval, so when you’re ready to seek approval, they’ll already have much of the needed data in their system.
When you are ready to take the first step to buying a house, reach out to the friendly, knowledgeable professionals at PrimeLending of Springfield, Missouri. We would be delighted to help you make your dream of homeownership a reality. That’s why we always take the time to listen and work diligently to match you with the best loan for your unique circumstances. To learn more about our services or schedule a consultation, contact us today.