Many people will finally make up their mind to forget the landlord and buy themselves a home. So they load up the family in the car and head toward the community where they would like to live. They may be looking for a place closer to work or closer to relatives. They may be trying to find a home in a better school district. Whatever the reason, they are motivated by a home and set out to find that perfect place for the family.
After seeing a few homes, the family decides on just one. It’s then that the parents decide to find a lender and a realtor. So just imagine how excited the family is to have picked out the home they’re going to be living in. Everyone in the family is making plans for their room and the entertainment rooms of the house. The are imagining the basketball court, the swimming pool, and of course, Mom is very happy with that custom kitchen she’s always wanted.
This process is truly putting the cart before the horse. The family has chosen a home that they think they can afford based on some silly water cooler conversation percentage that someone has passed along. The family has chosen the house without knowing how much a reputable lender will lend on it.
Too many times a family will get very excited about buying a home, only to be disappointed because they didn’t go about the process properly.
Now on the other side of the coin, imagine that you are a home seller and/or the real estate agent overseeing the sale. Couple number one comes to you with no apparent financing or any documentation from a mortgage lender; couple number two comes to make a deal armed with a pre-approval letter from some loan company you have never heard of or a .com lender from who knows where; and then comes couple number three.
Couple number three has already filled out paperwork to get their strong pre-qualification. The lender has gone through a very detailed process of collecting tax returns, work pay stubs, credit information, proper legal identification and more. Couple number three have already been pre-approved by a very well known and reputable lender who has closed thousands of loans in the community with some of the top real estate companies in the business.
Can you guess which couple the realtor or real estate agent is going to recommend to the seller? Everyone involved in the home buying or home selling process wants the loan to close on time. However, couple number one nor couple number two are more likely to have problems arise during the process that could very well kill the deal.
RP Funding offers its clients one of the strongest pre-qualification and pre-approvals in the industry. Before the family set out on the road with their real estate agent, RP Funding has collected the items listed above to make sure that the family can qualify for the mortgage. Most lenders do not give such attention to detail this early in the process. And most lenders have a much lower percentage of going from applications to closing successfully than does RP Funding.
Once someone is vetted and qualifies for a validated pre-approval letter, they are way far ahead of the pack in getting that home closed on time. There are a few very simple rules that the buyer must follow between the time of the validated pre-approval and the closing. A couple of “DON’T BREAK” rules are:
- Do not take any actions that will affect your credit rating from the time of the pre-approval to the actual closing. In other words, don’t run out and buy a car or even furniture for the new house by opening up new lines of credit.
- Inform your lender immediately if anything changes in your financial picture after the validated pre-approval is granted. This would include things like having a pay cut or adding someone else to your home; or finding out that you will become a party to a lawsuit.
Remember that upon the pre-approval your credit score is noted. Just before the official closing, your credit and employment and bank records are once again validated to make sure nothing has changed. If you want to avoid the problems of a sudden 11th-hour discovery of a problem, keep in touch with your team at the lending company. Keep in mind that no one is out to get you so to speak, all parties including the real estate agents, the sellers, the mortgage company, the attorneys involved and the closing company – – – all benefit greatly from making sure each deal goes through.
Therefore when you find the lender you want to work with, make sure that they are supplying you with a detailed pre-approval that is looked on as gold in the real estate industry.