Question:“My Realtor recommended that I start looking at properties and then after we have seen some various options, we would speak with a lender about financing. Is this the industry standard? And do you recommend the same-thing? In other words, at what point in the buying process should I speak with a lender about financing?”

Answer: These are great questions, and the most important questions I have been asked yet. 

Is this the industry standard? First off, there is no industry standard for when you should speak to a lender, but there is a common sense standard:)  which I will get into in a minute.

Do you recommend the same-thing?No I don’t! Now the common sense factor comes in to play.  How can you start looking at buying something if you don’t know how you will pay for it? if you can afford it? and what the best way to pay for it is?

At what point in the buying process should I speak with a lender?  My recommendation, is that you speak (and by speak, I mean have a consultation) with a lender 6 MONTHS ahead of the time you plan to start LOOKING at properties to purchase or plan on making your move.  6 months seems like a long time out, but it is necessary if you want to make sure you get the best possible interest rate and the lowest mortgage payment.  I have yet to have a client who wants to have a higher mortgage payment than they have to.

Getting your finances in order, to me, is the single most important part of the buying process and planning and preparation is the key to getting your finances in line.  If you have credit issues that need to be cleared up, whether they are from your own doing, from a mistake that was made by a company or from someone who stole your identity, it could very easily take that long to clear-up. 

Since your mortgage interest rate has a direct correlation to your credit scores (FICO scores), then the better your credit scores are the better your interest rate will be.  By speaking with the right lender 6 months ahead and allowing them to look at your credit, they can make sure you are in the best position possible and help you to work on your credit if necessary.

There is another reason to speak with a lender 6 months out. It is called mortgage planning.  I recommend making sure you have mapped out the proper loan program for your needs.  Speaking with a lender about your goals are important to make sure you choose the best loan for your needs.  How long are you going to hold the property? Do you need down payment assistance that you need to apply for?  What type of property are you going to purchase? What are your future plans? etc. 

The right lender will be able to save you thousands of dollars by making sure you choose the right program for your needs.  By looking at your goals 6 months ahead of time, the lender can make sure you will be able to qualify for that program.  Are there unique requirements or any changes that you need to make now to get you to qualify for that specific loan program when the time comes for you to purchase?

Want to make sure you save the most amount of money and don’t spend more each month than you absolutely have to?  This is the number one way, ahead of buying a home for an undervalued price.

I can put you in contact with great lenders that help with just these very situations. Call me and I can give you their phone #.