When buying a home, you work with 6 main professionals: the Lender, Realtor, Inspector, Appraiser, Title, and Escrow company.
To streamline the process, I recommend choosing the right Realtor first.
A qualified, licensed, and knowledgable Realtor can provide resources to help manage decision-making. Realtors will often have a list of preferred vendors that have proven themselves to be credible and consistent in their professionalism.
Realtors are legally obligated to disclose any financial affiliations up front, and it is illegal for Realtors to receive any kick-backs or gifts from lenders, which protects homebuyers from being mislead into working with the wrong person for the wrong reason.
Once you've chosen your Realtor, the professional that has the next biggest impact on your home buying process is the Lender.
The number one mistake I see home buyers make is meeting with only one lender
Lenders decide how much home you qualify for and what the interest rate will be, but rates are not set across the board for every person. Each lender has varying amounts of risk based off of their own portfolio.
What I'm personally seeing clients experience in the Las Vegas and Henderson housing market is that larger banks like Chase and Wells Fargo have lower risk indexes. As they're so large and do so much volume, they are able to be more selective with the loans they choose to give.
Smaller lenders tend to have higher risk tolerance and are able to give loans for lower qualification criteria or at better rates to stay competitive against the larger banks.
Meaning, that you can give your same financial information to 3 different lenders, and each lender can give you different amounts they are willing to loan you, at different interest rates, and with different fees. Meeting with more than one lender ensures that you're getting the best rate for you.
Mortgage credit checks do not negatively effect your credit score the way you might think
A common concern is that meeting with multiple lenders will drop your credit score. Mortgage credit checks are not the same as a credit checks like when you open a credit card or take out a personal loan.
When you sign up for a credit card or buy a car, you accept a line of credit on the spot. Often just seeing how much you qualify for, qualifies the loan, which can temporarily drop your credit score. When you meet with mortgage lenders to see how much you would qualify for, it's done by highly credible and licensed loan officers who are enabled to do an assessment of your finances without actually taking out a loan.
Lenders will pre-qualify you for a loan by considering your debt-to-income ratio (how much debt you have in relation to how much you make) and payment history to gauge the likelihood they will be paid back for the loan they give.
Based on these factors, they take into consideration the risk they they are willing to accept, and give you a letter for how much they would most likely lend you, given this superficial assessment. This is known as a pre-qualification letter.
Once you have the pre-qualification letter, your realtor can begin finding the right home for you, as this letter often defines your budget.
The second biggest mistake homebuyers make is thinking that being pre-qualified means you have the loan
You're pre-qualified, you find a beautiful home within your loan limit, all negotiations are done and you're so excited to move in you decide to buy new appliances so they can be delivered on your first night at the house.
DON'T DO IT!
A pre-qualification letter is only a superficial assessment of what you may qualify for through the lender. It is not a loan, which is why it doesn't affect your credit negatively to receive one. Getting the loan doesn't actually happen until the week you're set to close on the house.
Throughout the process of inspections, appraisals, and repair negotiations that your Realtor is managing, the lender will be asking for financial information from you to prepare for Underwriting. Underwriting will be doing a deep dive into your finances to put in place the actual terms of the loan. It will be the last step in buying a home before you can receive title to your new house.
Making large purchases (such as appliances or a new car) before the house has closed can change your debt-to-income ratio, potentially disqualifying you from the original pre-qualification -- making you unable to close on the house.
While it may be tempting to want to buy important items for the house, it could cost you the house itself.
The Rule is DO NOT MAKE ANY LARGE PURCHASES UNTIL YOU HAVE THE KEYS TO YOUR NEW HOME
Just remember: bills and food are all you want to record during the process of buying your house. If you have any abnormal purchaes coming up, speak with the lender first. Even if you feel silly asking the question, it is always best to make an informed decision than a guess.
What's your communication style?
When you have questions, will your lender be there for you? If this is your first time buying a home, you may have a lot of questions. If this is your second or third time purchasing a house, you may feel you have a solid grasp on the process, but no two deals are the same and you may have an occasional curve ball.
With all that in mind, when you initially reached out, how did the lender contact you? Were you put straight to voicemail? If you left a message, were they responsive? Do they rarely pick up the phone when you call? Do they only reply by email? Would you prefer a call? Do you prefer text?
You want to make sure that when you do have questions, they're answered promptly and in the way you feel most comfortable. Make sure that you're aligned with your lender on what you expect. If it takes days for a response or your lender doesn't have time to answer your questions, you may want to see what other options are out there.
Buying a home is one of the most meaningful investments a person can make. It can help shape your financial wealth, and if the person handling your money isn't giving you what you want, it's your responsibility to find someone who will. Speak up. Ask questions. Get answers. When it's all said and done, you're in control of your finances, and you deserve the best advisors in managing it.
Next Steps
Buying a new home can feel like an overwhelming decision, but it can be broken down into simple steps with the right professionals. Choosing the right Realtor will help you find the right house for the right price with less stress. Choosing the right Lender will help you make the most of your money.
Investing in real estate is an investment in your long-term wealth goals. Making sure you have the best professionals on your side will ensure you have all the tools you need to see your money grow.
To learn more about real estate market for Las Vegas and Henderson, visit the blog.
To see available Las Vegas and Henderson homes, visit JessicaReamHomes.com for the most up-to-date listings and compare neighborhoods.
Are you ready to take hold of your financial future through real estate? Call Jessica Ream with Windermere Real Estate in Anthem Hills to have the highly qualified team of professionals managing your real estate goals in Las Vegas and Henderson, Nevada, USA.