Ronald and Sara were a happy young couple ready to jump into home buying and get their first home together. When they called me, they knew what they wanted, a four-bedroom home with nice property and a pool in the million dollar range. There was a house, in particular, they had seen online that they were very excited to see right away. They thought this could be it, and they would be buying their first home.
I was excited for them too! I asked if they had spoken to a mortgage professional yet. They had not, so I gave them a few reputable contacts to reach out to and told them they should have a mortgage pre-approval before they started looking. They asked why, and I told them that the pre-approval serves three critical purposes, one, it confirms that they are eligible for a loan, two, it lets them know what their spending limit is and what the associated monthly payments will be, and three, it positions them as strong and qualified buyers when presenting an offer for the home they want to buy.
So they forged ahead, chose a lender, and sought their pre-approval. But they were soon shocked and disappointed to learn that they would not be eligible for a mortgage for at least another year.
Ronald and Sara were a power couple with great jobs and ample income. Sara had a Ph.D. and was the director of a graduate school. Ronald was an emergency room physician.
But, what they didn’t realize was that all the student loans they were paying off gave them a ratio of debt to income that was too high to get a mortgage. So we found a nice home for them to rent for a year. In the meantime, they worked hard with the credit expert company, North Shore Advisory to ensure they were on the fast track for managing their debt and raising their credit scores within the one-year timeline they had set as a goal.
Fast forward a year later, and they sailed through the pre-approval process to obtain a Certified Pre-Approval from William Raveis Mortgage, got engaged, and found and closed on a gorgeous new home in the university area of Fairfield, Connecticut!
Ronald and Sara also managed to jet-set off to Africa for a pre-honeymoon celebration on safari before returning to their new home to plan their wedding! Clearly they were perfectly situated to live happily ever after, but what were the lessons learned along the way?
Always get a pre-approval before you start shopping for a home so that you know where you stand, avoid unexpected setbacks, and can position yourself as a competitive buyer. Besides, an offer to purchase a property is not complete or acceptable without a pre-approval letter from your lender or proof of cash.
Be sure your pre-approval is of the utmost quality, as they are not all created equal. Recent changes to national lending regulations add extra time sensitivity and make this more important than ever. There are a number of new technology enhancements available that can make the whole mortgage process faster, easier, and more transparent for consumers.
William Raveis Mortgage is the only mortgage banker to provide a Certified Pre-Approval. This means that when they present a Certified Pre-Approval to a buyer, they have completed a full review of credit, income, and assets, reviewed supporting documentation and double-checked it all via an automated underwriting system to ensure that when the big day comes, the buyers get their loan and the sale goes through.
Last, but not least, it’s important to be aware of all the factors that can impact your credit score because, the lower your score, the more you will pay for your mortgage, (as well as insurance and other things). In fact, it’s a good idea to check your credit well in advance of applying for a loan so that you have time to work on it if need be. Visit North Shore Advisory, Inc. for an expert resource about credit tips and strategy. Once you have your good credit and Certified Pre-Approval in place, make sure you don’t do anything that can change your credit score before you close! Even a tiny negative change to your credit can bump up your interest rate and suddenly put your dream home out of reach. So check with your lender or Realtor about things you should or should not do during your home purchase process.
Then you are ready to make your dream home come true!
For questions about the process of buying or selling a home, or if you’re thinking about a move this season, send me a note below!