5 Reasons a Pre-Approval Should be Your First Step as a Home Buyer
The home buying process can be a long and confusing time for an individual.
Luckily here at The Orlicki Group we have a wealth of experience working with first time home buyers. Not only do we provide you with exceptional service but our in-process campaign will send you a wealth of information including simple videos to explain portions of the mortgage process. According to Zillow 77% of home buyers are getting approved prior to searching for their home. That number is up from prior generations.
Many people think that finding a house is the first step to buying only to be disappointed when they realize that either the home isn’t able to be financed or it’s not within their budget. Here are 5 great reasons why getting pre-approved is the best first step you can take when looking to buy a new home.
1. Figure out your budget.
Most people when buying have some idea of what they want to spend monthly. Is it what you’re paying for rent now? Is your current housing expense too much? Are you trying to downsize? These are all great factors that we can take into consideration when we personalize your pre-approval. Many big box banks just send you out with the absolute MAXIMUM you can afford. The average DTI for a buyer in 2017 utilizing a conventional loan was 23% which is well below the max you are able to borrow. We’ll work with you to find a suitable approval number that fits your needs.
2. Get to know your Mortgage Professional.
Throughout the home buying process you’ll be in direct contact with your mortgage pros often. Every loan originator and team does things a bit differently so getting in touch early and working out the best way to communicate and the people you’ll be communicating with is a great way to make your home buying journey easier and stress free.
You’ll be working with these people for usually over a month (average contract to close for real estate is between 30-45 days). Getting to know them on a personal level is bound to happen. We make sure that you’re given proper guidance throughout as well as regular updates on what to expect next.
3. Answer any basic mortgage questions.
Whether you’re a first time home buyer or a veteran of home ownership you’re going to have questions about your mortgage needs. The mortgage process is extremely complex. When you get pre-approved first you can answer a lot of those basic questions like “What loan type is right for me?” or “How much do I need to put down for a down payment?”. the pre-approval process will help you iron out your mortgage and get answers for many of the initial questions that home buyers have.
4. Connect your team.
Most people have a friend or relative who works in real estate who’s given them advice over the years. 64% of people in 2016 used a realtor that was a referral from a friend or family member. Chances are you’ll be doing the same. Once you get approved your lender will forward your pre-approval to the realtor of your choosing. In our case if you are not working with a realtor we’re always happy to refer you to one of the top notch professionals that we work with regularly.
Before you start looking for homes it’s great to get everyone on your team assembled and on the same page. Once you have everyone in your corner connected and working toward the same goal the process and communication becomes seamless. The most common people you’ll want to connect with are your realtor, your mortgage professional and your insurance agent as they’ll have a good idea of your current insurance coverages and can easily get you a quote once you find a new place. Just in case you don’t, here at The Orlicki Group we always provide you with a free insurance quote to from our preferred vendor to get a better idea of what your monthly cost will be. Getting pre-approved first gives you the opportunity to get everyone involved in line and ahead of the curve.
5. Be aware of any roadblocks.
Many people think that a pre-qualification is the best and quickest way to start your home search. With the rise of app’s like Quicken’s Rocket Mortgage you’re able to get numbers back almost instantly. There’s only one problem with that… the lender hasn’t done its due diligence and looked at your individual scenario.
There are many different reasons why someone might not qualify for a home that are outside of your normal credit score and income. During the pre-approval we take a more in depth look and review your entire situation including your full credit report to assure there aren’t any roadblocks or red flags that might endanger your home purchase.