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What You Need to Know Before Working with Real Estate Lenders

Updated: Jul 9, 2020

Choosing a good real estate lender is a critical decision that could impact the overall outcome of your transaction. Not only do you need an experienced real estate agent to help with negotiations and more, but your lender will play an important role when you are buying a home.

Photo by Precondo CA on Unsplash

If you aren't familiar with the mortgage industry, then it might feel like you are stepping into unfamiliar territory when beginning a conversation with a lender. Here are a few things you need to know to ensure a positive outcome.

Don't Wait to Talk to a Lender

Most homebuyers assume that talking to a lender is lower on the priority list. So, their approach is to find their dream home, then seek the financing needed for the purchase. The truth is that this approach is backward: it is best to begin the conversation with a lender as soon as possible.

Your lender will give you an idea about what your payments are going to look like based on your budget. Before you get too attached to a home, you need to know if the numbers will work for your family. This initial conversation can be a valuable way to identify how much you can spend on the property. Then, your real estate agent can help with the process of identifying properties that meet your needs.

Competitive Interest Rates

Remember that interest rates, loan terms, and approval requirements vary depending on the lender you choose. Instead of picking the first lender you find in Google, it's smart to do a bit of research about your options in the area. One good strategy is to ask friends, family, and industry connections for a referral.

With a little bit of research, you can get a competitive interest rate and favorable payment terms on the contract. Since most homeowners will be paying on the loan for 15 - 30 years, it makes sense to be proactive right now so you dial in the right mortgage for your ongoing needs.

How Do I Start the Process to Get a Mortgage?

When you've selected your mortgage lender, they often have a step-by-step process you can follow to get started with the loan application. You can get a pre-approval on the loan and take care of the documentation in advance. For example, your lender will have requests to see your bank statements, identification, asset statements, and more. Completing this pre-approval will get this paperwork out of the way, reducing the likelihood of encountering issues when you are closing on the deal.

In addition, your lender can provide a written statement that shows how much financing you can access for the purchase. Including this letter with your real estate offer is a way to give the seller peace of mind to know that you have the funding to pay for the home. Offers with financing verification have a higher likelihood of being accepted by the seller.

Personalized Solutions for Mortgages

When you find a good lender, it means that you have access to a team that will help with the personalization of your mortgage. Each situation is unique, which is why there isn't a one-size-fits-all solution for every home purchase.

Your lender can help you explore various mortgage options, including:

  • FHA Loans

  • Conventional Loans

  • VA Loans

Certain loan programs are designed for first-time homebuyers. Other loans are ideal for homeowners looking to upgrade or buy a second property as a vacation home. Share your personal goals with your lender to identify the best path forward for your home purchase.

Building a team with an experienced real estate agent and a knowledgeable lender is essential to optimize your outcome when you are ready to buy a home.

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