Making sure you have good credit is one of the first steps to buying a home. (AP Photo/Mark Humphrey)
Never feel that you cannot buy a home, if buying and home ownership is something that you truly yearn for. There is almost always a way to buy a home, if you are willing to follow the necessary steps. But what is the first step?
Do not waste your time looking at homes, until you have talked to a Mortgage Loan Officer from a Mortgage Company and let them fully prequalify you, before you look at any homes. There are mistakes in 30% of all credit reports and most people are not even aware that the error exists.
How do I get pre-qualified? In my experience, you are best served by a Mortgage Company rather than a Commercial Bank when attempting to secure a mortgage. Why? Because when you make application for a mortgage at a commercial bank the person that normally takes your application is one of the bank’s many vice presidents.
The Vice President generally does not have a vested interest in you getting a mortgage. Come Friday the vice president is going to get paid the same salary whether or not they make a mortgage for you. If they can find a reason to reject your mortgage application it just might mean less work for them.
The lending community has just gone through a major debacle. Thousands of loans went into default between 2007 and 2009 because of a shift in this country’s financial stability. Those defaults triggered a financial meltdown and the effects are still being felt to this day. Some lenders may still have the jitters about making new mortgage loans. They see new loans as potential future foreclosures.
Now, if you apply for a mortgage through a mortgage company or a bank that has a separate mortgage division you generally are much more likely to get approved for the mortgage. Why? It simple and basic human nature, the mortgage officer from a mortgage company does one thing, they make mortgages, they don’t have checking and saving accounts and don’t make loans for cars, etc. They have a vested interest in approving and making your mortgage. If they are not successful in making mortgages they are going to go out of business.
More importantly the mortgage officers are generally paid a commission based on the number of mortgages they approve and settle. If they don’t make a mortgage for you they have lost time, money and their paycheck will not be as large as it would have been had they made your mortgage happen.
Mortgage companies tend to go out of their way to do everything that they can reasonably do to make a mortgage for you. If they find a problem or concern they are not going to simply reject your mortgage as others might, they are going to work with you and do everything and suggest everything that they reasonably can to make the mortgage process successful.
They will tell you what you need to do to get approved for a mortgage, if you do it, you will generally get the mortgage. Consider talking to a mortgage company if you are serious about securing a mortgage and buying a home.
It is not uncommon for mortgage lenders to advise you and even hold your hand through a process in which you strengthen, rebuild or otherwise cleanup your credit score. They know what information needs to be removed, or improved, in order for their loan decision-maker – known as an underwriter, to view your application favorably and opt to approve you for a loan.
Few people who purchase a home ever say the effort they undertook to secure a mortgage was not time well spent. A home provides such a sense of personal power and is so influential in stabilizing someone’s financial strength that buying is still viewed by many people as being preferable to renting a residence and paying for someone else’s mortgage.
Michael Cassell, CRB,CRS,GRI, is the former chairman of the Maryland Real Estate Commission. He is a Broker/Owner of Creative Real Estate Services. He can be reached at Mike@MikeCassell.com.