#prequalified

First house. Second house. Fifth house? Tenth house? 

It doesn’t matter! Buying a house is definitely an exciting time. And there are any number of reasons why you’ve been thinking about buying a new home. You might have decided that you’re done renting, or maybe you’re just ready to get out on your own and start your real estate journey. Or maybe your family is expanding and you need a little (or a lot) more room. Or maybe you’re just done with trying to maintain home repairs on an old run down house and want to buy into a house that is ready to move in, with all the bells and whistles you can dream of. 

No matter what scenario you’ve found yourself facing, you’ve made the decision: you’re ready to buy. But where do you start? And are you really financially ready to make a move? A quick online search will tell you that the logical place to start is with a realtor, but to be honest with you, that’s not really the best place to start for you or for anyone else in your same situation. 

Instead, a good rule of thumb is to immediately begin researching and connect with mortgage lenders in your area. Not only will they be able to quickly tell you if now is a good time for you to buy and if you qualify for a loan, but they’ll also be able to help you determine what type of loan is best for you and what price range is best for you and what interest rate is available to you. 

We call that pre-approval, and many realtors are going to ask you if you’re already pre-approved for a home loan. That will help them get you into your dream home a lot more quickly, and it can save you a lot of heartache. If you know what your budget is ahead of time, you won’t be tempted to fall in love with that house you really can’t afford (and can’t get a loan for). 

But let’s not get ahead of ourselves. You might be asking yourself, “What is the very first thing I need to do?”

How do you find the best mortgage lender in Kansas City? 

Start by checking your credit score so that you’re not in for any rude surprises when you contact a mortgage lender. Once you know where you stand, reach out to several well established mortgage lenders to see what amount and rate they can pre-approve you for. Spend a little while chatting with them, asking questions about their processes, and getting to know them a bit. Once you have rates from several different mortgage lenders, compare their rates and your comfort level around each of them. From there you can make your decision about which one you’d like to move forward with. 

Alternatively, if buying a house isn’t really within your means at this time, a mortgage lender will be honest with you. But more than that, they can give you some tips that can help you move in the right direction. You may need to work on your credit score, or get your finances in a little better order, or you may find that you just don’t have enough equity built up in your current house to make moving a possibility for you (if you’re simply looking for a nicer home instead of needing to relocate due to a job). But knowing this in advance will keep you from an excessive amount of stress and heartache that would come from being unable to buy the house you’ve already fallen in love with. 

Check out this article by Realtor.com for additional reasons why you should speak with a mortgage lender as soon as you start thinking about buying a new house. 

Contact Several Realtors

Once you know your mortgage rate in Kansas City and your pre-approved loan amount, you can proceed with contacting a realtor. We recommend checking in with a couple different realtors just to make sure you find someone who you mesh well with and who takes the time to understand exactly what you’re looking for in a new home. A good realtor will take your budget into consideration and be able to give you a good idea of the type of house you can afford on that budget. (The swimming pool and hot tub and walk in shower might not be a possibility, we’re sorry to say). But if you started this process without being pre-approved for a loan, you’d have no idea if you could afford the type of house you were interested in. 

Not only will this narrow down your search list, but it can lead you to your new home so much faster than trying to look at a lot of houses that don’t fit in your budget. Or maybe you find out that you can afford more than you thought you could and it opens up some new neighborhoods or types of houses that you hadn’t even considered. (Let’s put that swimming pool back on the table!) 

Find the Perfect House that Fits Your Budget

Once you find the perfect house for you and you know that it fits within your budget, moving forward with a contact and closing is so much simpler than if had put this off until the very end. Many sellers also appreciate it when you’re pre-approved and take that into consideration when reviewing your contract. Often times that can be the difference in your offer being accepted over someone else’s. 

Consider this from the seller’s point of view. Would you rather take a risk on someone who hasn’t been pre-approved for a loan or someone you know already has the lender in place to back up their offer? It makes a lot of sense when you consider it from this perspective. Having pre-approval makes you a qualified buyer and that makes you a very safe bet for the seller you begin negotiating with. 

Calculate your Down Payment based on your Mortgage Rate

Finally, another great perk of talking with a mortgage lender before you sign with a realtor is that a lender will be able to give you a very good idea of how large of a down payment you’ll need to have when you close on a house. Knowing this in advance can help you be prepared for closing day instead of being surprised at the last moment at how much money you need to have in hand. 

Your mortgage lender will be able to tell you if you qualify for an FHA loan, which means that you may be able to get away with as low as a 3% down payment, or if you’ll need a traditional loan which requires a minimum of a 20% down payment. Regardless of the list price on the house you’re wanting to purchase there’s quite a bit of difference between 3% and 20%. Knowing this in advance can be a major life saver, especially when filing all your paperwork and documenting your finances for your mortgage lender and the underwriters. 

In Conclusion

When it’s all said and done, we know it might be tempting to jump the gun, so to speak, and start house hunting right away, (just so that you don’t miss out on that perfect dream house!) or even fall in love with a house before you’ve had a chance to look at it. That’s the fun part of buying a new house - getting to look at a variety of homes that may or may not be in your price range. But doing that before you get pre-approved for a home loan isn’t in your best interest and can lead to confusion, disappointment, and a lot of frustration. For more information, check out this article by LendingTree on why you should contact a mortgage lender before you contact a real estate agent. 

Starting your journey by having a discussion with several mortgage companies in Kansas City, or whatever area you might be living in or wanting to relocate to, and then moving forward with the one you’re most comfortable with, is going to make the entire process move more smoothly and quickly than if you wait until after you’ve already put an offer on a house. There is nothing worse than watching a client fall in love with a house and have their offer accepted only to find out that they can’t get approved for a loan to cover the cost. It’s absolutely heartbreaking.