There are many players and terms involved when buying a home. So many that you never even knew they existed. Did you know there is an escrow agent? Metes and bounds? Lender vs Real Estate Agent? These are just a couple that you’ll encounter and while these various companies and services are needed there are some that are more important than others. And the two at the top of your list is your mortgage company and your real estate agent. These two will be with you through the entire process from just “thinking about buying a home” all the way through your closing. By the way, the escrow agent is the person that oversees your closing.
But between a lender and a real estate agent, is one more important? If so, which one should you talk to first?
Lender vs Real Estate Agent: The Agent
Your real estate agent is the person who will sit down with you and discuss your needs and wants. Where do you want to live? What about the commute to and from work? How are the schools in the area you’re looking in? How long? What about the future do you plan on starting a family? Price range? Condo downtown? Further out? La Mesa or Escondido?
When you first embark on a search for real estate you’ll probably start where most every other first time buyer does- on the internet. There are multiple sites where you can search for homes, look at properties for sale and get a host of demographic data about the area. But before you get too far into the process, it’s time to talk to a real estate agent. If you don’t know of one, we do and can provide you with an experienced real estate agent or two.
A real estate agent will know things about the area you want to live, much more so than what you can find on the internet. It’s no secret the internet is both a boon and a burden as it relates to information you gather on your own. Some of the information is factual while other information is, well, not exactly on point.
A real estate agent doesn’t cost you anything. When you sell a home you own you will then pay your real estate agent a commission based upon the sales price of the property being sold. But when you’re on the buying end, you don’t pay any commission. Instead, your agent that helps you buy the home and negotiate the sales price gets a part of the commission the seller pays.
Your real estate agent is a professional. Based upon the information you provide your agent at your initial interview you’re then provided with a series of properties for you to consider. It’s really a lot of work on the agent’s part. But one of the questions your agent will ask at your initial meeting will be, “Have you talked to a lender?”
If not, don’t expect your agent to get too much further doing research for you. Your agent wants to see not only that you’ve spoken with a lender but also received a pre approval letter.
Lender vs Real Estate Agent? Your Lender
When you first talk to a lender you’ll also be asked about where you’d like to live and other questions but your lender wants to know more about your financial situation. Over the phone, you’ll answer various questions about where you work and for how long. You’ll disclose your gross monthly income and ask about any current credit obligations you have such as an automobile loan and credit cards. The loan officer will then pulls up current interest rates and provide an estimate about what you can qualify for. You’ve just been pre qualified. But your agent today would like to see more.
Your agent wants to see your pre approval letter which essentially verifies the conversation you had over the phone. You’ll be asked to complete a loan application as well as provide permission for the lender to pull a credit report. For a pre approval, the lender will also verify your income information by reviewing copies of your most recent pay check stubs, W2 forms and to make sure you have sufficient funds to close you’ll provide copies of your bank or investment statements from the accounts you’ll use in this transaction.
So far, the lender has verified your income and using current rates put together an estimate of your monthly payment which will also include an amount for property taxes and insurance. If you have other credit obligations such as a car payment that too will be taken into consideration. Once your monthly credit obligations are tallied your lender will provide you with an amount you can qualify for and issue a pre approval letter which discloses the various items that have been verified prior to the issuance of your letter.
So, who do you talk to first? We say your lender because the real estate agent won’t get too far into the process unless you can provide evidence that you’re not only serious about buying a home but all you need to complete the transaction is to find a property. By showing the pre approval letter to your real estate agent, the wheels will begin to turn. Is it a mistake to talk to an agent first? No, it’s not a mistake. But if you haven’t yet spoken to a lender, your agent will ask that you do.
“We’re loving our new place and we’re very pleased with how smoothly everything went through closing. Thanks for keeping us up to date on the possibility of refinancing at a lower rate; we trust your judgement as far as waiting until the rate is around 5% lower before we refinance. We’re very interested in pursuing that if rates drop to that level. Thanks so much for all your help and personal attention!”
“Chad and his team are exactly who you want handling the financing of your home. Whether it be a new purchase or refinance, he and his team are one of the most professional, responsive group of people I’ve worked with. Buying a home can be very stressful and Chad and his team took all of the necessary steps to make the process as painless and as quick as possible. They are extremely knowledgeable, organized and have great follow through. You won’t ever be left wondering what the next steps are. I highly recommend him and will use him in all of our real estate transactions moving forward.”
“Chad and his group made the mortgage approval process smooth and understandable. Multiple updates and explanations during the process kept me informed of progress. Chad also provided great advice on other home services, in particular an insurance company that saved me thousands of dollars a year on home and auto insurance.”