 | Randy Vickers is the owner of Priority Mortgage Corp of Wichita, which opened in Jan. 1989, is the oldest locally owned mortgage company in Wichita. Randy has been in the real state business since 1983 and is a licensed real estate broker as well as a licensed mortgage broker. Priority Mortgage Corp of Wichita KS Lic #1996-0122. Randy can be reached at 316-721-7700 |
Real Estate
2007-03-01 11:38:00
The chicken...or the egg?
Which comes first, the house or the loan?
Many real estate shoppers have this quandary. Is it best to go find a home, and then get my loan set up, or should I go to a lender before looking for houses? The truth is, either order can work, but there are some real advantages to checking in with your lender prior to writing a contract.
The real estate market in Wichita is such that when an offer comes in to the seller, the first thing they want to know is whether or not the buyer can perform and close the deal. Since most buyers are not able or willing to pay cash for a house, this means the seller wants to know if financing is already set up and ready to go. Almost every time a realtor presents an offer, the seller will immediately want a “pre-approval letter” from a lender to show that the buyer is able to purchase the home. This “pre-approval” does a couple of things that will help in the negotiation of the property.
If you’re the buyer, with only a little more than some basic tax documents, a pay-stub and bank/savings statements, a lender can quickly put together numbers to make sure that there is a loan program to fit the terms the buyer needs. This will include rate, term, down-payment, and credit requirements. The buyer and realtor can then make sure the houses being viewed are within the financial capabilities of the buyer, and that there is a high likelihood of closing. This also gives the buyer more time to review the available financing options, without the pressure of a contract on the line.
All realtors that have spent much time in the business put a high degree of emphasis on having their buyers see a lender before driving the buyer all over town, only to find out they are not able to buy the house they want. The worst thing for a realtor and buyer is to fall in love with a property that they can’t afford. A Realtor with a workable price range in mind is much more likely to find a good fit for the buyer, and in a lot less time spent showing homes and driving around town. A buyer’s agent is also going to be more effective in negotiating a contract if they have a good feel for the financing that’s available for their buyer.
The seller wants one thing out of this process, and that is to sell his house at the best possible price as quickly as possible. The idea that the buyer is ready to close in a reasonable time is usually of great value to the seller. A seller is much more likely to negotiate on price if they believe that the deal is going to close in a timely manner, as time is money to them. The pre-approval allows the lender to get a jump on the paper process, so there is less time between contract date and closing.
The short answer is that meeting with a lender ahead of time is of great value to all parties in the real estate transaction. In almost all cases, having the pre-approval piece in place will help with your house hunting and your contract negotiating.
The Super Bowl is over, spring is almost here, and it’s time to head out and start your house hunting process. Until next month…
