Generally in these articles, I will elude to a “grey area” since many topics pertaining to real estate can be complex and everyone’s situation is different. Thankfully, this topic is more cut and dry. When should you speak to a lender? The answer is: TODAY.
While some heed my advice and pick up the phone right away, the more cautious buyers usually say, “I’m not ready to speak to a lender.” Here are a some reasons why that’s probably not true:
- Believe it or not, there is a misconception that if you speak to a lender, it will adversely affect your credit. A conversation does not do that and even if they ask your permission to check your credit, it only slightly affects your rating. (Usually 2-4 points).
- Even if you’re not ready to buy for some time (1+ years), speaking to a lender can help you prepare for when the time comes. I’ve seen too many instances where a buyer is personally & professionally ready only to find out that financially they are not. Almost always they waited too long to speak to a lender.
- Lenders have all types of loan options out there which can save you lots of money and increase the amount of home you can afford, but the only way to know is to ask. Also, if your credit rating is on the cusp of being in a higher tier, the lender can advise you how to boost it and you can save some serious dough!
- Speaking with a lender does not prevent you from shopping around; you’re not locked in.
- Just because you were denied or given an unfavorable rate by one lender does not mean every lender will. Not all lenders are created equal.
- You might be doing something that’s not helping your credit or worse yet, hurting your credit. This isn’t uncommon since there are countless websites out there giving bunk advice for managing your credit.
- No, your father, uncle & brother-in-law are (most likely) not suited to pre-qualify you for a loan. Much like the internet, there’s plenty of bad advice and preconceived notions being thrown about by family member’s these days. Don’t take their word for it… consult a professional who does this every day.
- People think that if they talk to a lender and are not ready, they are wasting their time. This couldn’t be further from the truth. Lenders will happily work through the process with you…no matter how long it takes.
- As they say, “The Truth Hurts”… Some people are embarrassed by their financial situation. Believe me when I say, lenders have seen worse, especially in the wake of the Great Recession. This is business, nothing more…they’re not there to judge… they’re there to help.
I’ve said time and time again that the real estate process doesn’t have to be some big complicated thing for most buyers. If you have a realtor and a lender who know what they’re doing and have the information they need, it can even be fun. The trick is to be sure you’re proactive about contacting a lender since if you have no one to lend you money, you have no way to buy the home.
I would be happy to showcase your question in my next installment. Go ahead…Ask me anything or leave a comment in the section below!
Seth Lejeune – 610.804.2104 – email@example.com / Berkshire Hathaway – Fox & Roach
Seth is a licensed REALTOR and small business owner based in Philadelphia, Pennsylvania.