Lenders in general have gotten a bad rap. They are often looked at as the “dream crushers” or “creepy uncles” of the real estate world. They have to know a lot about you and they ask A LOT of questions. Often they ask you the same questions multiple times. They’ll want to know every detail about every penny that has flowed through your accounts in the last year. It seems invasive and excessive. I know…I’ve been through it.
In reality, if you are thinking of buying in the next 12 months, you should already have contacted a lender. A (good) lender will pull your credit report, help you handle any issues with your credit and give you a pre-qualification letter.
The first objection I commonly hear is that a lender will do a “hard pull” on their credit and lower their score. “Hard pulls” start to affect your credit when you have many inquiries from multiple different types of establishments. For example, applying for a department store credit card, a car loan and a mortgage all in a relatively short time frame, will ding your credit. The credit bureaus will see this as a sign of you preparing to incur a large amount of debt and adjust your score accordingly.
In truth, you can have three inquiries in a 30 day period without it negatively affecting your credit score, because the credit bureaus allow a consumer to “shop” for services. If you have a few lenders run your credit to compare rates, it will have little to no affect on your score. This means you are not locked in with the first lender who gets you pre-qualified. You are also not locked in to using that lender when it comes time to finance your home.
If you’ve talked to a lender and you’ve been pre-qualified, you are ready to go shopping for homes. It’s imperative to have your financing strategy ready BEFORE you see any houses, because you want to be prepared to put in an offer immediately on any property you fall in love with. If you have to scramble to get the finances together you open the door for another buyer to snag the property.
Having a great relationship with your lender is beneficial in many additional ways. They will help you repair any credit issues. They often have access to your credit history should you need to check it occasionally. And they are watching rates constantly, they can update you on great refinancing opportunities to ensure you are getting the best deal possible.
Clearly in my business, I keep in constant contact with my lender partners, but it really would benefit anyone to keep a great working relationship with a great lender. If you need a list of great lenders that I’ve worked with…Feel free to reach out to me at Greg@AtlasPremierRealty.com!