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Get Your Finances in Order before you start shopping for your New Home

As one of the top agents in the area, having sold in the 100s of Millions in property – I always make sure my buyers finances are securely in place before we go shopping! It is not only important that you as a buyer know that you are in a secure financial position, it is important when you write an offer that you can show the seller that you are able to close the deal.

Obviously, if you are writing an all cash offer, you are in an extremely strong position. The only thing you will need when writing the offer is to provide proof that the funds exist to close the deal. This doesn’t have to be one account, you can show the funds across several accounts as long as the total is there to close the deal.

If you are getting a mortgage, you need to make sure you have been qualified and approved by a lender! There are two types of letters a lender can give you – one is called a “pre-qualification” the other is a “pre-approval”.

The pre-qualification is not as strong as a pre-approval – this typically comes once you have had a conversation with a lender, verbally sharing your income, debts, and desired price point for purchase. The lender can quickly figure out what they’d be able to lend to you and will give you a letter stating so subject to conditions for approval.

The pre-approval, however, comes after you have provided paperwork to the lender that verifies the conversation which led to the pre-qualification. In a competitive selling market, most sellers will require a pre-approval to accompany the offer you are sending in on a property.

It is also important to talk to more than one lender, as every lender will have access to different products depending on your situation. Make sure you understand the distinction between a “direct lender” and a “mortgage broker”

A direct lender is one that has direct access to funds from which they lend, sort of like a big bank. Sometimes they also have “broker access” to other products from other companies.

A mortgage broker, however shops for the best product for you from a variety of lending sources.

I typically suggest using either direct lenders or mortgage brokers, but another source for funding can be your big bank – they have mortgage products as well and sometimes they are very competitive especially if you are a “private client” with them. The downside to the big banks, is they usually have a lot of RED TAPE you have to go through and can take a lot longer to get the deal closed.

If you have any questions on this topic or anything else real estate related, or if want any additional information please don’t hesitate to call, text or email me at 310.738.8098 or tim(dotted)durkovic(at)elliman(dotted)com.