Let’s be honest, it is a whole lot more fun and exciting to go shopping for your next home than it is to shop for the loan you are going to need to pay for it.
We get it!
Attending open houses and trying to picture your new life in all the beautiful homes is a thrilling experience.
However, just as you find yourself discriminating against potential abodes for this next phase in your life, it is important that you also invest some time into choosing your lender.
Just as you probably wouldn’t feel quite right about buying the first home you come across no questions asked, you shouldn’t feel comfortable about hiring the first lender you meet without at least quizzing them a bit.
At Heart of Lending, we are dedicated to preparing you for more than just getting approved for your home loan; we’re here to educate you on everything you need to be a prosperous homeowner. That is why we are covering the five key questions you need to ask your lender before signing on the dotted line with them.
1. Can I Get Pre-Qualified Or Pre-Approved?
There is a big difference!
Many buyers get these two confused because they sound so similar but getting yourself pre-approved gives you a lot more buying power and credibility than getting pre-qualified. Generally speaking, you can be pre-qualified without any hard pulls on your credit or significant verifications on your income-to-debt ratio.
Before you start filling out dozens of applications all over the place, it's wise to consult with a lender over the phone or in person to give them an idea of your financial standing so they can predict the likelihood of your application being accepted.
Being pre-qualified or pre-approved is the first step to homeownership so if your lender doesn’t think you are quite ready, stay tuned for question number five.
2. What Is The Process and Timeline For Getting Pre-Approved?
In a serious rush to get moving? You will want to ask your lender how long the approval process will take them.
It's very important that you're careful not to make any financial moves that could impact your credit during this time. DO NOT open any new lines of credit or close any. You can always check your own credit score using a site like Credit Karma without doing any damage, to get an idea of where you stand before going for the approval.
You should also clarify the length of time the pre-approval will be good for. Don’t make the mistake of thinking once you are pre-approved you are set to shop for homes for six months. Many lenders’ pre-approval is only good for 60-90 days but can be extended with proper communication.
3. How Do You Communicate With Your Buyers?
The last thing that you want during this process is to be left in the dark or subject to any last-minute surprises by your lender.
When you speak to your potential lender, ask them how they plan on staying in touch with you, how often you can expect updates, and how they plan on communicating. Think about how you would prefer to communicate with them throughout the process (email is common) and share your feelings with them as well.
4. How Much Will I Have To Come Up With For My Downpayment?
The amount of your down payment will vary based upon a few factors:
5. What If I Don’t Qualify For A Loan?
Just like with most things in life, getting a mortgage can come with its own set of obstacles. If your lender tells you that you are not likely to qualify or you are not approved for your loan, don’t worry.
This does not mean that your dreams of home-ownership are dead!
The best lenders will take this opportunity to step in as a teacher and offer step-by-step guidance on what you can do to get that approval stamp on your next application, just as we do here at Heart of Lending.
Before you choose your lender, make sure you ask them what type of programs or assistance they offer you if you are not able to qualify. You might be surprised at how many lenders are not willing to put in the work to get underqualified applicants to the closing table. You deserve a true partner in your success, not just a salesperson, hungry for their next fast commission.
Ready To See If You Qualify To Buy A Home?
Dreaming of your next home will always be just a dream if you don’t take that first big step and get yourself qualified and approved to purchase it.
Susan Avakian-Koroghlyan is a mortgage professional, a mom, a cancer survivor, and former teacher.