WHAT’S THE HURRY? Well, have you ever heard about a buyer losing their dream home because the loan did not close in time? It happens a lot. SO, if you research rates, fees and the lender before finding the right home, you might avoid this very sad experience.
The 11 Reasons to Start NOW
1. To compete against cash offers. Being competitive with other buyers that may be submitting cash offers is extremely important these days. All-cash purchases accounted for approximately 35% of all sales of residential property in 2014. If you were a seller, would you rather accept a cash offer or a borrower without a pre-approval?
2. To close quickly! What if the sellers ask all buyers for an extremely quick close—15-20 days? Will you have time to research potential lenders? Probably not.
3. To research the quality of lenders. Taking time to evaluate the lender, such as reviewing licensing, loan officer employment experience and social media websites for positive and negative comments can help you find the best lender. See if the mortgage lenders you’re considering have any complaints on these sites: Better Business Bureau, YELP, Angie's List, Consumer Affairs, etc.
4. To prepare loan information. Lenders require more information about your assets, job and credit history than ever before. Wouldn't it be better to take your time gathering all the necessary documentation such as bank statements, W-2's, assets, loans, payment histories, etc., than having to scramble to find it all quickly? It is hard enough to juggle daily work and family commitments, much less applying for a loan immediately. Already having your loan information at the lender reduces stress.
5. To know your highest possible loan amount. What if you find a beautiful home with a higher price tag than you were considering, and you’re now wondering if you can afford it? Wouldn't it be great to know the highest loan amount you could afford?
6. To compare rates and fees. The only accurate way to compare lenders' rates and fees is all on the same day and time. Rates move day-to-day and minute-by-minute. If you get quotes from lenders on different days, it is not an accurate comparison. It is better to compare ahead of time on a quiet day in the market, which gives you time to determine the lowest cost lender. It also gives you time to ask about various fees and to request complete, detailed answers.
7. To have time to negotiate. If the fees are higher at another lender, you have time to research the reason for the differences in fee(s). Are the fees justified? Can the lender lower or remove the fee(s) to be competitive with another lender?
8. To show a higher credit score. Having the highest possible credit score can save you $1,000's, or be the difference in being approved or denied the loan. The average credit score for home loans was 727 in December 2014. Working to increase the score during the time you are looking for a home can reduce your costs.
9. To document income. Are you self-employed or working part or full-time for cash? Documenting income in specific ways can help increase the loan amount. Finding the right lender to help you through this process can make all the difference.
10. To build lender rapport. Submitting your loan information, talking with the loan officer or processor, and building a rapport with a lender makes sense because you’ll have a chance to explain and work through any issues that arise.
11. To be comfortable and happy. Deciding on a lender and building communication between the loan officer and realtor will help everyone relax knowing that everything is moving along smoothly.
Bottom line: Being prepared and taking time to research can save you thousands of dollars in fees, and save you the heartache of losing your dream house either because the loan didn’t close in time or because another borrower outbid you with a cash offer.
Dan Stone, CA BRE #00197958 / NMLS #856820, The Mortgage Fee Coach, Inc.