Getting a mortgage will be the most difficult part of your home buying process, but you can have a better experience if you get prepared and start working with your loan officer right from the beginning.
The hardest part about buying a home is getting a mortgage. For the most part, you will actually enjoy the home buying process: after all, looking at homes is like “shopping,” and most people enjoy shopping. Looking at homes online, going on showings with your agent, getting to know the different areas and neighborhoods – those are all the fun parts about buying a home.
But the mortgage process is messy, complicated, and often intimidating. That’s why we want you to be prepared. Our general advice to be engaged and proactive is particularly important for getting a mortgage. If you’re actively involved throughout the mortgage process, and if you start planning ahead now, you’ll have a much more pleasurable experience.
Because the mortgage process is so central to your home buying experience, you should have a general sense of how that process will develop:
•Initial Consultation. You’ll meet briefly with your loan officer and get a pre-qualification letter to advise you of your general price range.
•Application. Once you find a home to purchase, you’ll complete a formal mortgage application to your lender.
•Processing. Your loan processor, who works with your mortgage officer, will review your file and probably contact you about supplementing it with some supporting documentation.
•Underwriting. Your processor will submit the file to an underwriter, who could deny or approve the application, but will more likely issue a “conditional commitment” required more documentation or clarification.
•Clear to Close. Once you have satisfied all the conditions, your bank will issue a commitment letter and you will be “clear to close” your transaction.
How can you be more engaged, so that you are better prepared? Most importantly, you should meet with a loan officer right away. At Hudson United Mortgage, our affiliate lending company, we encourage our clients to meet with a loan officer right at the beginning of their home search, because even a short consultation can answer your questions about the current rate environment, assuage some of your concerns about the process, and also help you get a better sense of your buying power. Too many buyers start looking for a home without a clear idea of how much they can afford, and they waste a lot of time looking at homes that are above, or below, their actual price range.
At your initial consultation with your loan officer, you should be prepared to discuss in some detail your financial situation.
Remember that loan officers, at least the ones with Hudson United, are under strict licensing requirements to protect the privacy of your information and keep your confidences, so you should feel free to discuss your personal situation without holding anything back. Your loan officer will review your financial profile, give you a general sense of your price range, describe the current interest rate environment, and explain the various mortgage products that might be available to you.
Most importantly, by having that initial consultation with your loan officer, you’ll be able to get a pre-qualification letter: a statement on the bank’s letterhead indicating that you have been “qualified” for a particular price range. Now, you should be aware that a pre-qualification letter is not a firm commitment from the bank – you won’t get anything like that until you complete and submit a formal loan application, which you cannot do until you actually find a home to buy. Rather, the pre-qualification letter is really just a general indication of your buying power.
But the pre-qualification letter is still important for two major reasons:
First, it will allow you to go through the process of discussing your financial situation with your loan officer, which will ensure that you have a good sense of your true price range before you go out and start looking at properties.
Second, and perhaps more importantly, a pre-qualification letter from a reputable lender like Hudson United is almost a “stamp of approval” for sellers and listing agents. In a competitive environment for buyers, a pre-qualification letter indicates that you are credible and serious, and that you have the general financial wherewithal to back up your purchase offers. Indeed, many sellers demand a pre-qualification letter before they will even consider your offers!
If you do not yet have a pre-qualification letter, just call 1-866-721-7263 to speak to a Hudson United Mortgage loan officer. We can arrange to get you pre-qualified over the phone and have a letter emailed or faxed to you immediately.
All that said, we should note that a pre-qualification letter is not a binding commitment from the bank. You won’t get any kind of formal approval until you have identified a property to buy and have submitted a full application to a lender.
Rather, the pre-qualification letter is designed to give you just a general idea of your price range, so that you have a better sense of what you can afford when you start looking for a home.
Accordingly, we strongly urge that you have a short sit-down with your loan officer early in your buying process. By forging that connection with your loan officer, you’ll secure one of the most important members of your home buying “team,” and someone you can then contact whenever you have financial questions or issues.
This is really only a general introduction to the mortgage process. If you want a more comprehensive overview of mortgage products, qualification guidelines, and interest rates, check out the Hudson United Transaction Orientation Guide, which is available from your Hudson United mortgage loan officer or your agent.
Buying a home requires more than just the services of a great real estate agent. You are going to need a team of real estate specialists to help you with your financing, legal, and insurance needs. A great team can make a big difference in your real estate transactional experience, so it’s important to start assembling that team as soon as possible.
Buying a home is a big project. It’s not something you can do yourself, and it’s not something that even the best real estate agent in the world can do by herself. Like any big project, you need more than just one person. You need a team.
Your real estate agent is like the quarterback of your team, the most important player, the one who has the ball in her hands for most of the game. Indeed, her primary role through much of the process will be directly helping you find that home: taking you on showings, evaluating the market, preparing and presenting offers, and reaching a meeting of the minds with a seller.
But once you’ve reached an accepted offer with a seller, your agent’s role becomes much more facili tative . She doesn’t have much direct work to do once you’ve found the home you’re going to purchase, but now has the primary role of coordinating and directing the rest of the players on your team. Like the quarterback, her role is to set the formation, call the plays, and make sure everyone else is doing their job correctly.
Here are some of the players that you’ll need on your home buying team:
•Loan Officer. Your loan officer is responsible for ensuring that you get financing for your home purchase. You should start working with your loan officer right at the beginning of your process, getting prequalified so that you know how much home you can afford.
•Home Inspector. Once you have an accepted offer on a home, you’ll need an inspection to ensure that the home is fundamentally sound. Your home inspector will review the condition of the home, and prepare a report that you’ll be able to review with your agent before you sign contracts to purchase the home.
•Real Estate Attorney. Your attorney will counsel you about your rights and responsibilities under your contract of sale, and negotiate the final terms of the deal with the seller’s agent.
•Title Representative. Your title rep will order your title insurance, which you’ll need to protect against adverse claims of ownership. And if you’re working with Hudson United, you can order preliminary lien searches during your home search process to gather important information about homes you’re placing offers on.
•Home Insurance Representative. You will need full home insurance coverage before your closing. As always, we urge you to be prepared in advance, and one way to do that is make contact with your Hudson
United Insurance representative early in the process, discuss your insurance options, and then be able to secure coverage quickly.
Throughout your home buying process, it’s your agent’s job to facilitate the work of all these professionals. She’ll coordinate with the loan officer, schedule and attend the inspection, provide your attorney with all the deal terms, order preliminary lien searches from your title representative, and provide whatever information your insurance representative needs to make sure you have coverage at your closing. Like the quarterback, a good real estate agent knows how to get the most out of the other players on the team.
Choosing Your Team
Now that you know the players, the next question is about choosing up sides. If you want to have the best possible transactional experience, we have some recommendations about how you should pick the professionals that you’re going to have on your home buying team:
First, trust your agent’s guidance in choosing your real estate professionals. Your agent is going to have to coordinate all the moving parts of your real estate transaction, so you will most likely have a better experience if you agent is working with professionals that she has worked with in the past. Your team will perform better if the players have more experience working together. Moreover, trusting your agent’s recommendations is also a great way to ensure the quality of the professionals you’re going to work with.
Those professionals know how important it is to maintain their service reputation in the industry, to ensure that they continue to get referrals from real estate agents. After all, you’re likely to do only one real estate transaction in the next few years, but your agent will do many transactions this year and have many more opportunities to refer service professionals. Those attorneys, engineers, and mortgage officers want to stay on that referral list.
Second, hire only local professionals with expertise in your market area. Too many buyers make the mistake of hiring out-of-market professionals who are not familiar with the local market when buying a home. They’ll try to get financing from some online mortgage company because they get seduced by some “bait and switch” rate that will mysteriously be unavailable once they are getting ready to close. Or they’ll try to save a few bucks by getting relatives who happen to be attorneys to handle their contract and closing, even though they don’t normally do real estate law. Don’t make these mistakes. Trust your agent to refer you to professionals who know the local area and have a strong reputation in the local industry. Hiring out of market lenders, attorneys, or engineers might look like a good deal, but it almost always causes delays or difficulties for your home buying process.
Third, don’t wait until the last minute. We include this section on “Assembling Your Team” in the Preparation Stage of the Orientation Guide for a reason – because it’s important for you to start planning ahead in choosing the professionals who are going to help you through your real estate transaction. For example, most buyers make the mistake of waiting until they have an accepted offer to hire an attorney, which invariably causes delays in the process while they find the attorney, make first contact, have a consultation, and then start the process of reviewing the sales contract. Similarly, too many buyers find themselves scrambling to get home insurance coverage the day before their closing, because they failed to plan ahead.
That’s why you should start assembling your team now. Ask your agent for referrals for the professionals you will need throughout the process. Establish those relationships. It doesn’t take a lot of your time, or their time, to have a five-minute conversation to put them on notice that you might need their services sometime in the future. And then they’ll be available to you throughout the process whenever you have questions that you need answered. You’re going to need them eventually, so why not hire them now?
Finally, we also encourage you to meet with the professionals from Hudson United, who can provide you with an integrated and seamless “one stop shopping” experience for your mortgage, title, and insurance needs. The better the working relationships among your team members, the easier it will be to ensure that you have a great transactional experience with Better Homes and Gardens Rand Realty.
Your first consultation with your buyer agent is an important step in setting the right course for the rest of your home buying experience. It’s a great opportunity to share with the agent your hopes, wants, and desires about the process, and to ensure that your agent knows exactly how to best service your needs. In order to have the best possible first consultation, we encourage you to prepare for the meeting by thinking about what you want from your home buying process.
We want to give you some information about what you can do before your initial consultation with your buyer’s agent. This will ensure a more productive meeting, consistent with our overall advice to be actively engaged throughout your buying process.
At your initial consultation, your agent will ask you questions about your familiarity with the buying process, your preferences in the type of home you want, your geographic needs, and your purchasing power. We will also be asking about any particular concerns or needs you have about buying a home.
You will have a more productive meeting if you think about those questions in advance. You have no obligation to prepare ahead , but you’ll find that you’ll get more out of the meeting if you think about these issues before you’re sitting down with your agent. Moreover, this exercise will also help you get into the right frame of mind about your home search process, and help get you into the practice of being more proactive about the entire process.
Here are some of the questions you should consider before sitting down with your agent for the first time.
Why Are You Moving?
People move for all sorts of reasons, and it’s helpful for your agent to know about your particular motivations so that he or she can help prepare to get your process moving at the pace you desire.
•What’s the reason for your move?
•What’s the time frame of when you want to be in your new home?
•Have you already started looking on your own? What have you found that interests you?
Remember that buying a home can take a long time. Most of our clients spend months in just the home search process, and once you find the home that you want to purchase, you’ll likely spend three to four months more completing all the transactional work that is required to execute a contract, secure financing, and finishing all the other tasks required to get your purchase closed.
How Well Do You Know the Home Buying Process?
You should be prepared to discuss with your agent your comfort level and familiarity with the buying and financing process. This will help your agent in gauging the amount and type of information you should be getting throughout the process.
•Have you done this before, or are you otherwise familiar with the process of buying a home?
•What are your biggest concerns about buying a home?
•Are you familiar with the current state of the regional housing market?
•How comfortable are you using technology to search for a home, like on randrealty.com?
All our clients are different. Some have purchased homes recently, and know exactly what to expect. Others are first time home buyers apprehensive about what they should expect from the process. Whatever your situation, you want to make sure your agent knows what you need from us to help you fully understand the process.
What Do You Want From Your Agent?
You should think about what you’re looking for from your Better Homes and Gardens Rand Realty agent to ensure that your agent knows how to best service your needs.
•What are you looking for in an agent?
•What’s the most important quality you look for in service professionals?
•How do you want to communicate with your agent: phone, email, text, or only in-person?
•How often do you want to hear from your agent : daily, regularly, or only when new properties come onto the market?
•How often do you want to go look at properties, and are you already looking on your own?
Our goal at Better Homes and Gardens Rand Realty is to ensure that you have an outstanding home buying experience. The first step for making that happen is to know exactly how you want to be serviced, so make sure you explain to your agent what it is you want from him or her.
How Familiar Are You With the Financing Process?
You should feel comfortable discussing your financial situation with your real estate agent, since all our agents are licensed professionals who are qualified to help determine your purchasing power. You should absolutely have a good sense of your purchasing power before you spend time looking at houses that might be above or below your proper price range.
•What price range do you think you qualify for, based on your income and your savings?
•How much are you comfortable spending for your monthly mortgage payment, insurance, and property taxes?
•How comfortable are you with your understanding of the financing process, which has become more complicated in the past few years?
•Have you been pre-qualified for a mortgage amount by a local mortgage consultant, or do you need to talk with a Hudson United Mortgage representative?
If you would be more comfortable discussing finances with a mortgage consultant, have your agent contact one of our Hudson United Mortgage representatives to discuss financing with you.
What Are You Looking For in Your New Home?
Finally, and most importantly, you should take some time to think through what you’ll looking for in your new home. Now, you might have a general idea of the kind of home you like, but you’ll be amazed at the myriad choices that you’ll have once you start looking at the properties that are available.
The list of questions below are designed to prompt you to think about all the various considerations that might go into your home purchase. Some of these questions will address issues that are unimportant to you, but some might spark you to realize that you have particularly needs and desires that you’regoing to want to satisfy in your new home. So think about each of these questions, and if they prompt some ideas then be sure to share them with your agent.
Ultimately, though, even as you go through the exercise of thinking about the kind of home you want, it’s important to keep an open mind. What a lot of home buyers find is that they end up purchasing a home that is very different from the types of homes they initially started looking for when they began the process. They start out looking in a particular town for a specific home style, but once they begin looking at what’s available they fall in love with a totally differently-styled home that is completely outside their original market area. That’s a very normal part of the process, so don’t be alarmed as your tastes evolve.
Your initial consultation with your Better Homes and Gardens Rand Realty agent is just the first step of your home purchasing process, but it’s an important step. It’s your first opportunity to really think through what you want from your agent, what you’re concerned about with the process, and what kind of home you’re looking for. So please take some to think about these issues before you meet with your agent, to ensure that you have the best possible first meeting and get things started on the right foot.
You’ll have your initial consultation with your real estate agent, who will familiarize you with the sales process, introduce you to our service approach, and determine your needs, goals, and concerns in buying your new home. In the Guide, you’ll learn about how to prepare for that meeting, how to assemble the rest of your home buying team, and how to get started using RandRealty.com.
The most successful home buyers are people who get proactively engaged in the purchasing process. Your agent is going to be hard at work finding you the right home, but there are some things he or she simply cannot do. So throughout this process, we’re going to urge you to stay involved in your transaction, which is the best way of ensuring that you have a great service experience . The first chance to be proactive in your purchase is your initial agent consultation.
Buying a home is easier than buying a car. The transaction is more complicated, because the stakes are so much higher, but the process is actually easier.
For example, let’s say that you’re buying a four-door sedan. To find the right car, you have to go to a bunch of different dealerships, because dealers will only sell you the cars they have in their own inventory. So depending on your price range, you might have to go to a dozen different showrooms: Chrysler, Dodge, Chevy, Honda, Ford, Acura, lnfiniti, Mercedes, BMW, Audi, Volvo, and all the rest. And you might even have to go to multiple dealerships that sell the same brand, since one Honda dealership can’t sell you a car held by another dealer. The process can be exhausting.
On top of that, you are always at a disadvantage when navigating the car buying process, because you’re totally on your own. That car salesman in the showroom might be the nicest guy in the world, but we all know he works for the dealer. He doesn’t work for you. His job is to get his boss the best price for the car – which by definition means getting you the WORST price! And that salesman has huge informational advantages over you. He knows what other similar cars have sold for recently. You don’t. He knows the ins and outs of that car, and how it compares to other cars. You don’t. Even if you do all your research, you’ll never equal his product and market knowledge. It’s not an even playing field.
Now compare that to buying a home. Because of the way the real estate industry is structured, with an agent on both sides of the transaction, home buyers have a much better experience navigating the process of buying a home. Unlike car dealers, real estate brokers share all their inventory through a multiple listing service, allowing any member buyer agent to show and sell their properties. So you don’t need to visit dozens of different real estate brokers or agents in order to see the whole inventory – you just need one good agent. Regardless of who listed that property, any agent who is a member of the local MLS can show you that property.
More importantly, when you buy a home, you have the opportunity to hire an agent to represent your interests. It’s not like being at the car dealership where everyone works for the seller. Your agent works for YOU. She has fiduciary obligations to look out for your interests. Moreover, if she’s a professional, full-time agent, she has market and product knowledge : she knows what comparable homes have sold, what homes have NOT sold, and what’s currently available on the market. That puts you on an even playing field with the seller.
You see the difference? When you buy a car, you’re on your own, and you’re always going to be at a disadvantage working with a salesperson who has superior market and product knowledge, and who negotiates the sale of cars every day for a living. But when you buy a home, you get the advantage of hiring an agent to help you sift through the inventory, advise you about what’s going on in the market and with that particular property, and then help you negotiate your deal.
And on top of all that, your buyer agent usually comes free! In most cases, buyer agents are paid by the seller out of the proceeds of the sale. If you represent yourself, you don’t get that savings in your pocket – instead, the seller or listing agent get to keep it. So if that’s the case, why are some buyers so afraid to hire a buyer agent? For example, real estate agents get calls like these all the time: “Thank you for calling Better Homes and Gardens Rand Realty. How can I help you?”
- “I saw your sign on a house on Ridge Road in New City. Is it still available?”
- “Let me check. Yes, it’s still available. It ‘s got four bedrooms and three-“
- “Great! Could you take me to look at it?”
- “Well, I’d be happy to do that. Why don’t we make an appointment for you to come into my office so we can sit down for a few minutes and find out what your situation is? Then we can go take a look at that home and maybe some other similar listings that might meet your needs.”
- “That’s okay. I just want to see that house. But I don’t want to come to your office. Can we meet there?”
We see this all the time in the real estate industry – buyers who would rather meet “at the house,” who spend months visiting open houses on their own, who waste hours staring at pictures on their laptops rather than making appointments to go see houses in person. They’ll meet an agent at the house, realize it’s not right for them, then say goodbye to that agent. A week later, they’re calling another agent on another house, meeting at the property, realize it’s not right for them, and so on. Such a waste of time!
Why are so many people afraid to hire a buyer’s agent? Sometimes, potential buyers in the early stages of looking for a home are actually too considerate for their own good. They’re afraid to call upon an agent’s services and make the agent waste a lot of time helping them if they’re not really sure they’re ready to buy. And while we do appreciate the thoughtfulness, we should make clear that this is a TERRIBLE reason not to hire an agent. That’s the job! That’s what real estate agents do! They help people starting out in the buying process and guide them through that process. Do a lot of clients eventually choose not to by something? Of course! But that doesn’t mean that the time spent was “wasted.” Agents don’t think that way. You shouldn’t either.
The biggest reason, though, is that buyers are afraid of “salespeople.” They’re terrified of the “hard sell.” They fear getting a “pushy” agent who is going to pressure them into buying a home before they’re ready. We particularly see this with potential clients who are in the early stages of “just looking,” and who are afraid of agents inundating them with phone calls and emails once they express any kind of interest in buying a home. It’s like when you go into a department store and try to avoid the sales clerk because you’re really “just looking” and don’t want the clerk hovering over you for the whole time.
We can certainly understand why some buyers feel that way, because the real estate industry has a pretty well-deserved reputation for aggressive sales techniques that can sometimes make buyers feel uncomfortably pressured. But let’s also recognize a few important things:
But if you find that your agent is making you uncomfortable, just say something! Your agent works for YOU, so she should accommodate to your needs and comfort level. If the agent is a professional, she should get the message, and you won’t have to worry about working with a “pushy” agent.
Ultimately, we understand and appreciate that people are afraid of dealing with a “salesperson.” That’s why Better Homes and Gardens Rand Realty has pioneered the “client-oriented” approach to real estate brokerage that emphasizes our agents’ roles as service professionals rather than “salespeople,” and encourages agents to take a proactive approach to identifying and satisfying our clients’ needs – including the need NOT to be sold to.
We don’t want our real estate agents to act as “salespeople” any more than you do. So we hope that you’ll realize that having an agent is a good thing, not something to shy away from. A fear of sales pressure is a really bad reason to deny yourself the services of a good real estate agent, particularly when it is so easy to dispel that pressure and focus the agent in providing you with the services you need.
Rather, you should think about all the advantages you get with a good buyer’s agent:
First, your buyer’s agent acts as a fiduciary representative, legally bound to look out for your best interests.
If you’ve never bought a home before, or you last bought a home prior to the mid-1990s, you might not even realize that buyer agents have a fiduciary responsibility to their clients, because buyer agency did not exist in New York until about 20 years ago. But it’s now one of the most important advantages you have in buying a home with an agent. Indeed, the fiduciary relationship with your agent is similar to the attorney-client relationship that you’re probably familiar with: among other responsibilities, your agent has the duties to be loyal only to you, keep your confidences, and make all disclosures to you of any material facts. When you get a buyer’s agent, you’re not getting a “salesperson” – you’re getting someone who is on your side, representing your interests.
Second, working with a buyer agent gives you several competitive advantages that you cannot get working on your own.
Some of those advantages, including advantages that you can only get working with a Better Homes and Gardens Rand Realty agent, are:
•Access to sold property data. Even in the information age, it ‘s difficult for lay people to get full and complete access to sold information, which is crucial for helping you determine the market value of unsold listings and in preparing your offers.
•Preliminary lien searches. Because of our affiliate relationship with Hudson United Abstract, your agent can order a preliminary lien search on any property you place an offer on, which can help you in formulating your pricing strategy or identifying “red flags” on the title that might delay your transaction.
•The intermediary negotiating role. Any professional negotiator will tell you how important it can be to have someone act as an intermediary in any negotiation, to deflect persuasive pressures and allow you to limit bargaining authority from “outside the room.”
•Neighborhood Expertise. A good real estate agent knows the neighborhoods, and can provide you with information that goes beyond the four corners of the listing detail sheet, information that might be crucial for determining the true market price.
•Transactional Facilitation. A real estate agent’s job doesn’t end when you reach a meeting of the minds with a seller – rather, the agent then becomes a facilitator, coordinating all the other professionals in the transaction to make sure you have a smooth transition through to your closing.
And that’s only a short list of some of the biggest advantages you have in hiring a good buyer’s agent. Basically, good agents add value to your home buying process.
Third, a buyer agent provides a range of services that will help you have a better transactional experience.
From your first consultation to your final closing, your agent is responsible for a wide array of services that you will need to ensure a smooth home buying experience. Throughout the process, your buyer agent will stay in constant communication with you, through phone or email, to make sure you’re up-to-date with what’s happening in the market, your home search, and your transaction.
Finally, you generally do not pay for your buyer agent’s services, because the seller usually pays all the broker fees out of the proceeds of the sale.
It’s really one of the best deals in the industry: you get all the services of a buyer agent to represent your own interests, help you find the right home to buy, and facilitate the entire purchasing process, and you don’t even have to pay for it. In certain cases, sellers do not offer to pay buyer agent fees, but your agent will make that clear to you when you look at the home, so you will be able to condition your offer on the seller paying the agent out of the sale proceeds. Generally, though, you get all the benefits of buyer agency without any of the direct costs.
Ultimately , this is one of the best deals you’ll ever have. Your buyer agent will work tirelessly on your behalf, always in your best interest, and in the end it will be the seller who pays your agent for those services. Think of it this way – real estate agents have a full-time job in helping buyers through the transactional process. If they’re not around to do that job for you, then you have to do it for yourself. And you probably have your own job.