Why Your Choice of Lender Matters
So you want to buy a house? Your real estate agent takes you shopping, find one you like, then you just go get a loan, easy right? Except when it’s not. First of all, an online mortgage calculator cannot tell you what your unique borrowing capability is, and cannot be used as a basis for determining your price range. Secondly, there are other factors in play. Are you buying a property with an HOA or association fee? That will impact your purchasing power because it changes your total monthly payment. Are you self-employed or counting on unreported income like tips or childcare? A lender may not be able to count the full amount. Do you have a habit of paying your bills late? There are so many little factors that affect your loan approval.
On the lender side, there are also unique factors that make one lender better for certain situations. A loan is not a loan is not a loan. If you’re buying a condo, it will need to be approved. If it’s in a small building it may not work to plug the details into the generic checklist generally used, but a small local bank may be able to review it on a case by case basis and decide it’s fine. There are numerous other situations like this one and you have to ask yourself – Do you want the decision about your loan made based on your capability as a borrower or based on the requirements of the investor (big bank) who is going to buy the loan as soon as you close?
The exciting thing is that the market adjusts. People need places to live and they need money to purchase them. So when regulations tighten up, other players jump into the market with new offerings. We have lenders who have programs for people with short sales or foreclosures on their record, low credit scores, and other challenging situations. I received an email this morning from one of our preferred lenders Peter Kent of Universal Lending offering two new programs. One is for self-employed borrowers like myself. I recently tried to apply for a loan at the end of the year. I needed that year of income to qualify for the home I wanted. I had the bank statements, check stubs, and financial reports to show I legitimately earned that money, but at the end of the day, the lender said I had to file my taxes before they would count it. That was in December and I wouldn’t be filing until February so the deal got cancelled and I couldn’t buy the house. This new program will allow people like me to use the documentation they have without waiting for next year’s tax season.
If you are looking to purchase property any time in the next two years, start talking to a lender now. It doesn’t cost you anything and it will help you be as prepared as possible as well as giving you time to learn more about the process so you can pick the best fit for yourself. We’re not lenders but we know a few, so contact us if you have questions and we can connect you with some great options.
For more information on buying check out our resource page.