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Embrace Mortgage prequalification.jpg

Mortgage prequalification has become an essential part of the home buying process, yet many buyers fail to consider this step. Here are some reasons to get prequalified before you start your home search.

As the spring home-buying season evolves one thing is clear, available home inventory is low. The lower than average housing inventory is creating quite a demand for homes in popular price ranges and areas. It is imperative that serious home buyers are well prepared for the experience of competing for their desired dream home.

The Common Scenario

Most home buyers pursue homes in a kind of backward fashion. They start by looking at homes online and then going to preview them in person. Through the process of scheduling or requesting more information about a home, they are introduced to the community of real estate agents. If they decide to buy the house and need financing, they will need to speak with a mortgage lender to see if and what they qualify for.

When a buyer reaches out for information on a home, they may have no idea who will call them back. They end up seeing the house with an agent they know little if anything about. If they like the home, they may have less than 24 hours to make a purchase decision. If they need a mortgage, the agent will likely instruct them to use their favorite lender who the buyer also knows nothing about. This process leaves the unwitting and unprepared buyer wanting a home but having little chance to obtain it.

A Better Way

A more effective home buying scenario looks like this: Contact a mortgage lender, interview some Realtors, and find a home. Using this plan allows the buyer to compare lenders interest rates, service fees, and special financing programs that may be available. Not all mortgage lenders have the same programs.

Not all Realtors are the same either. Some have different plans and charge different fees directly to the buyer. A savvy agent can make sure you are aware of any new listings that meet your desired criteria within 7 minutes from the time they become available. Yes, we agents have better home search programs than Zillow.

It has been my experience that many home sellers will take the most secure offer on their property over the highest value offer. Armed with a solid financing plan and real estate agent who understands what you are looking for and how to get it makes it more likely you will not lose your desired home.

Don't Be Afraid of the Mortgage Qualification Process

I recently spoke with Keith A. Zielaskowski of Meridian Bank. He stated the following: "Many buyers are concerned that if they are not going to buy within the next few months that they do not want to have their credit pulled because we will have to do it again in the future and they do not want to suffer the perceived significant drop in score. This scenario could not be further from the truth. Many people use Credit Karma to get a free score. These scores are often artificially inflated. When I pull their score, it is lower, and they feel the pre-qualification effort caused the drop. In truth, credit scores only drop between 1 and 3 points during the pre-qualification event. Secondly, It is imperative that we can troubleshoot any potential problems as far in advance as possible which far outweighs the minimal drop in credit score."

Getting pre-qualified is not like going to the dentist (no offense to dentists out there). It is a free, no obligation service that has tremendous value to a home buyer. Many times sellers will consider a solid low-risk offer over an offer of higher monetary value.

Luck is a matter of preparedness meeting opportunity. Get pre-qualified for a mortgage and make your own luck. Understand and apply this simple plan, and you could be having that Easter celebration in your new home next year!

“Knowledge is Power!"


Jeffrey C. Hogue