If you’ve purchased, sold or are thinking of buying a home, you know there are many moving parts to the transaction. Whether you are buying your first or fifth home, a good Realtor will always make sure to ask you one thing: Are you preapproved?
First step to buying a home: Get preapproved
Before you take even the first step into that potential new home, you should get preapproved with a licensed lender. Preapproval ensures that a Realtor will not present a potential home that is out of your price range. There is no worse feeling as a homebuyer to tour a beautiful home and fall in love with the property, just to find out later that you’re not able to buy it.
There are many financial warnings lenders can prepare you for before you consider buying a new home. Those can range from finding red flags on your credit that you might not have been aware of to resolving a collections issue. Or perhaps one of your jobs doesn’t qualify toward your credit, which could make you think you’re financially prepared to purchase a home at a certain price, but not on paper. This is very common in Las Vegas with our prominent tip-based economy.
So, how do you determine who your lender should be? There are a lot of moving parts to buying a home, especially if you’re a new homebuyer. One important piece is determining your mortgage lender, which can be tricky if you don’t know where or how to start looking. My advice? Use your Realtor’s lender, and here’s why.
■ Trust who your Realtor trusts
When you’re looking for your Realtor, many often opt to work with someone they know and trust. Much like the real estate industry, the mortgage lending business is a reputation-based industry. This goes for the Realtor as well, most of whom would not compromise their own reputation from referring a lender who they do not absolutely trust.
■ You don’t need to know what you don’t already know.
There many steps to the homebuying process that homebuyers are completely unaware of, and for good reason: You don’t need to know them. The professionals you hire should take care of 99 percent of the process without needing to pull you into the conversation. When you use a Realtor’s preferred lender, those two entities, along with the title company, should be able to easily communicate and submit filings, inspections and other reports throughout the monthlong closing process without you.
If you opt to use a lender that is not a preferred lender of your Realtor, the entities often rarely talk to each other. Instead, many homebuyers can become bombarded with phone calls and emails during work hours or at home, asking them to call one of the other entities to confirm details or send updated information. The homebuyer ends up getting involved in the majority of paperwork that they should never need to worry about, and the process can go from being simple and fun to stressful and overwhelming.
■ What if your Realtor does not have a preferred lender?
Sometimes a Realtor does not have a preferred lender that they can recommend. When this happens, it’s best to first ask for their broker’s preferred lender. Most brokers will have a preferred lender to offer to clients, which can still be great for establishing a relationship between your Realtor and your mortgage lender.
Another method is to refer to services such as Zillow for lender reviews. The review system is easy to navigate and is usually full of reliable information from past homebuyers who used the lender. Most homebuyer do not hold back in their reviews. You will see the good, the bad and the ugly, so reviewing these websites is a great way to garner reliable feedback on possible lenders.
■ Look at quality, not interest rates.
One of the first things homebuyers gravitate toward when seeking out a mortgage lender is low-interest rates. But it’s important to remember that you always get what you pay for when it comes to lenders. If you wanted cheaper rates, the quality of the company, the communication and the overall experience will likely be subpar.
The lending industry is what I would call a “get what you pay for” business. There are online companies that have lower rates, but you become just another account without a face. The communication will likely not be personable and deadlines can often be missed, which can cause homebuyers to pay more throughout the process. So save yourself the heartache and find a lender that is rated highly among past clients rather that those who have the cheapest interest rates.
Caitlin Turkovich is the regional manager for Union Home Mortgage – Team Turkovich in Las Vegas and Fort Bragg, North Carolina. A U.S. Army veteran, Turkovich specializes in VA loans. For more information, visit teamturkovich.com.