Most people miss a key step before going to open houses and finding a real estate agent: talking to a mortgage advisor. Not only does this help you better understand which loans are available to you, but it also makes you more attractive to sellers and real estate agents.
Here are four reasons you should talk to a mortgage advisor before you begin the house-hunting process.
1. It sets realistic expectations
There’s nothing worse than finding your dream home than realizing that it’s just outside your financial reach.
Plus, just getting an online quote isn’t the same thing as being pre-approved. A pre-approval letter proves to both real estate agents and sellers exactly what you can afford.
2. It helps catch sellers’ eyes
Coming in with a pre-approved loan offer, whether you’re talking to a real estate agent or a potential seller, proves that you’re serious.
You want to present yourself as hassle-free and complication-free, especially in competitive real estate markets. You aren’t “just looking” and a seller can trust that you can actually sign the check.
3. You’ll finish the paperwork earlier
You’ll need a lot of paperwork to complete the loan, including W-2s from the past two years, pay stubs for the last 30 days and recent bank statements. Sometimes more documentation is required, and every situation is different.
Starting the document-collection process earlier will make it easier when it’s time to finalize your loan, and it reduces the likelihood that the seller pulls out because of mortgage complications. It will also make your process go much quicker once an offer is accepted. Besides, once your offer is accepted, you will be very busy with inspections, planning and packing and looking for documents just makes it more stressful.
4. It helps you know what you’ll pay at closing
The money you will need to bring to closing is going to be for more than just your down payment. After you apply for a mortgage, your advisor will give you an idea of how much the entire loan costs will be, which sometimes include insurance and property taxes. While the seller sometimes pays some of the closing costs, it is not guaranteed, and you want to be prepared that you have enough for the transaction.