So you say you want a mortgage?

mortgageapplication

Searching for a home without a mortgage is little like completing a credit card application at the checkout counter – times 100.

While the checkout delay will annoy the line of retail shoppers behind you for few minutes, shopping for a home without a mortgage will alienate sellers and that could cost you the home of your dreams.

With your best interests at heart, your agent likely won’t stand for such behavior.

One of the perks that comes with hiring a real estate agent is the advice they offer when you are making your way into the world of home buying.

Show sellers the money

“Sometimes homes are only on the market for one day and they have multiple offers. If you find the perfect home and there’s more than one offer on the table, the seller will always choose the offer presented with a pre-qualification letter,” said Rae Catanese, an agent with Prudential Tropical Realty in Tampa, FL.

Motivated sellers who’ve been sitting on the fence – some of them for years now – know the score and aren’t about to squander an opportunity to sell. They know you are just as motivated as they are if you’ve got money in your pocket.

“Since most buyers search for homes on the weekend, and you may not be able to get a letter until the next business day, a seller won’t even look at your offer,” Catanese added.

To avoid surprises, your agent also will advise you to check your credit before you visit a lender.

“Credit is the first area that I go to when speaking with a new client. I work to get my buyers on track if their credit is marginal. If the credit is lacking, you have no buyer. Today’s lending margins are far to strict to not make this a No. 1 priority,” said Mark Gladue an agent with Keller Williams – Forward Realty Group in Madison, WI.

Once your credit passes muster with your agent, apply for a written mortgage pre-approval with some level of guarantee that you can borrow the money you’ll need.

Honesty is the only policy

The lender will want a host of information about your job tenure, employment stability, income, your assets (property, cars, bank accounts and investments) and your liabilities (auto loans, installment loans, mortgages, credit-card debt, household expenses, insurance and others).

“Be completely open and honest with the loan officer. This is the time to disclose items one doesn’t like to mention, such as judgments and liens, child-support payment, bankruptcy, foreclosures, and other credit blemishes,” said Debra Kroon, a broker associate with Yosemite West Real Estate, Inc. in Oakhurst, CA

“Even upcoming changes in job status and marital status should be disclosed. That way, your loan officer can work with you to resolve what issues can be resolved and to factor in those which cannot,” Kroon said.

You’ll need pay stubs, tax returns, rental agreements, divorce decrees, proof of insurance and any other documentation the lender requests to verify statements on your application. The sooner they are available, the faster your application will proceed.

Again, your real estate agent can advise you what documents you’ll need.

You know how much you can afford

Shop around for the best rates and terms, but settle on a single loan application and see it through. Multiple applications will trigger multiple credit report checks and while that won’t hurt your credit, lenders are risk-adverse. Each lender will see the credit report checks and speculate about your motives.

Don’t let the lender loan you more money than you can afford. Your approval likely will be based on your gross income, compared to your debts, but your real take home pay has had taxes, savings, perhaps other amounts deducted.

The housing crash is littered with foreclosed properties once owned by those who leveraged to the hilt and borrowed money based on what the lender was willing to lend. Others speculated on equity gains that either never materialized or came and went faster than expected.

“Many pre-qualification and pre-approvals don’t take into account additional homeowner association fees or other fees or master association fees. So, although you may be able to afford the house on paper, these fees combined with your mortgage payment amount may be more than you can afford and ultimately, you’ll be denied your loan,” said Rowan Samuel, a real estate agent with The Samuel Team – John R. Wood Realtors in Naples, FL.

About the author

DeadlineNews.Com's Publisher, Executive Editor and Founder, Broderick Perkins, was the first real estate journalist to manage a daily newspaper's online real estate section. He parlayed more than 30 years of old-school journalism into a digital real estate news service offering "News that really hits home!" -- the Silicon Valley bootstrap, DeadlineNews.Com. Network with Broderick Perkins on LinkedIn, FaceBook, Twitter, Google+ and the Bloomberg Business Exchange.

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