I think this misconception stems from new buyer enthusiasm. People get excited about owning a home, not paying a mortgage, so they gravitate towards the shopping step and figure they’ll deal with the mortgage side when they have to.
In short, unless you plan on paying cash, looking at homes before consulting a mortgage broker puts the cart before the horse. If you don’t know how much you can afford, you won’t know what homes are even options. If you put an offer on a home without knowing that you can actually get a mortgage for it (or how much that mortgage payment will be), you risk losing your Earnest Money (the money you give the seller with your offer), not to mention the time and other costs associated with buying a home. In fact, most sellers will require that you show a Letter of Pre-Approval from a mortgage broker before they will even let you walk through the home!
It’s crucial to first know what your home-price range is before looking at homes.
At Evergreen, we do this in steps:
1. Step One: The “Quick and Dirty” Consultation – We’ll take a “verbal” of your income, monthly debt payments, estimated credit score, and availability of down payment funds. With that info, we will give you estimates of (a) The maximum home price you can afford, with the corresponding payment and; (b) How much home your maximum budgeted monthly housing payment will afford. This only takes about 15 minutes but gives you a reasonable price range to consider.
2. Step Two: The “Cursory Glance” Stage – With the info from Step One, you can go online and see what homes are your price range. Zillow.com, Trulia.com, and UtahRealEstate.com, will show you pretty much all of the homes for sale, including those listed on the MLS (a home-selling database for realtors).
3. Step Three: The “In-Depth Analysis” – If you like what you’re seeing from Step 2, then we do the in-depth analysis. This is a crucial step, because as they say, the devil is in the details, and that couldn’t be more true in mortgages and real estate. In this step, we will check your credit and review your tax returns, income documentation, and asset documentation (bank statements). We will even run an Automated Underwrite that will tell is with 99%+ certainty if the loan is going to be approved. During the process, we may change your maximum home purchase price, depending on the results. This is a crucial step, because it lets you shop with true confidence.
I should note as well that we encourage potential home-buyers to have a consultation 6+ months before they think they will actually buy a home. That’s because there may be items (like credit report issues) that will take a bit of time to remedy.
In short, unless you’re loaded, you can’t buy a home without a mortgage, so let us figure that out for you first.
