Real Estate Matters
While real estate agents have a great deal of practical experience in the finance realm, they are not mortgage lenders. That means that they are not able to give you specific advice about which mortgage to choose or how you should finance your home purchase.
However, real estate agents are great connectors. They can put you in touch with professionals who can help you through the process. In the meantime, they can help you evaluate your options and make decisions that work for you and your family.
Because the financing of a home purchase is generally the most complex element of the transaction, it is important that you discuss your finances and financial needs with your real estate agent upfront. What follows are a few questions you might ask your real estate professional, along with some insight into their possible answers.
Do you have any lender referrals for me?
Your real estate agent or broker probably knows practically everybody in your market, including a variety of excellent lenders and mortgage brokers. He or she will be able to refer you to several.
How do I choose the right lender?
Your personal financial situation will go a long way in determining which lender is right for you. There are lenders who specialize in working with first-time homebuyers, buyers with poor credit, self-employed buyers and more.
How early should I start preparing for the mortgage process?
The answer will probably be “yesterday” since it is never too early to start preparing. You will almost certainly want to check your credit reports, pay down debt and improve your credit score, as needed. However, you will not want to actually apply months ahead of time, since rates will change and different options will become available.
How much house can I afford?
At this point you will probably want to choose a lender and undergo a pre-qualification or pre-approval process, depending on how ready you are to begin your home search in earnest.
What is the difference?
Pre-qualification is based on information you provide to the lender and can give you a quick idea of your home search budget.
Pre-approval is more detailed and involves submitting your application and documents to your lender to begin the underwriting process. This is an important step as you will want to submit your pre-approval letter with your offer on a home.
What should I be careful about during underwriting?
You will want to make sure that your financial history is as clean as possible, so avoid having insufficient funds in your checking account and do not open new credit accounts.
What if I don’t have enough for the down payment without the sale of your current home?
Your real estate agent can connect you with a lender who specializes in loans that are designed for exactly this situation. Alternatively, he or she may be able to help you navigate a 1031 tax exchange or other alternative option.
What options are available if I need to sell a house then buy?
As you continue through the process, you may want to discuss use and occupancy, or other options to help your timelines sync up and smooth the transition between homes.
Can I get help with closing costs?
If you know that you will need help with closing costs, talk to your real estate agent about how you can structure your offer in order to ask for the seller to help at closing.
Are there grants or programs to provide down payment assistance, or help with closing costs?
Your real estate agent should have a good understanding of ways to obtain assistance. These may be specific to a particular neighborhood, city, county, or the state or governmental agency.
Can you explain any contingencies related to the finance process?
When you make an offer on a home, your real estate agent will discuss with you the various contingencies that you can add into the contract of sale agreement with your offer, including a financing contingency, and an appraisal contingency.
Are there any alternatives to a traditional mortgage loan?
If you are looking for an alternative financing option like seller financing, or a 1031 tax exchange scenario, be sure to discuss this with your real estate professional early on in the process.
Ask your agent about the perspective and insight that they are able to provide to you, so you can better understand the process and make more informed decisions.
For More Real Estate Questions, Information and Advice Contact Elisa Jo Eagan “The Real Estate Godmother” (609)703-0432 and Remember…”There’s No Place Like Owning Your Own Home!”
