019: Buyer Commandment 3 – Thou Shalt Get A Pre-Qualification Before Shopping For A Home

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Jen and Mike finally made the decision to stop being renters and become homeowners.  They were excited!  They both knew they had great credit since they checked their credit rating with a free credit reporting service, so they called an agent and started shopping.  They saw some great houses, and some not so great houses.  In all, they went to 30 different properties before they found THE ONE.

It was perfect.  Great curb appeal, great school district, close to work, and had more than enough room for their growing family.  The kitchen and the living spaces were exactly what Jen had always dreamed of, and Mike could already see himself relaxing in the built in man-cave.  Before putting in their offer, they calculated for themselves what the loan payment would be and decided that it would be a stretch, but it would be worth it!  So they put in their offer, and after a little negotiation, they agreed on a purchase price of $350,000.  They took their executed contract to their local bank where they’d been customers for years, and put in their mortgage application.  They went back to their apartment and immediately started boxing up their things.  Sure, it would be several weeks before they would actually move, but they were excited!

A few days later, Jen’s phone rang.  It was Chris, their Loan Officer.  “Jen” he began, “I’m not sure how to break this to you so I’ll just say it – you and Mike can’t qualify for the loan on the house.”  “How can that be?  We both have great credit, we both have full time jobs!” “That’s all true, but there’s a lot more to your financial picture than good credit and employment.  I’m afraid the best you can qualify for based on the information in your application is a $300,000 purchase price.”

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This is a scene that plays out far more often than most people realize, and when it does happen, it’s crushing for the people in Jen and Mike’s shoes.  Not only have they wasted a lot of time looking for and falling in love with a house they can’t afford, but they also will have their perceptions of all of the future houses they CAN afford tainted by the experience.  This is why it’s so important to contact a Loan Officer before beginning your home search.

In this episode, we welcome Clay Bohannan, Senior Loan Originator and Partner at Encompass Lending Group as a guest host.  With Clay, we dive into the many details of the mosaic that makes up your full financial picture.

In this episode you will learn:

  • What are the three pillars that make up your financial picture?
  • What are the top things you can do to improve your financial picture?
  • When should you start working with a loan originator?
  • What is the process for obtaining a Pre-Qualification?
  • What is the difference between a Pre-Approval and a Pre-Qualification?

If you would like to discuss your financial picture with Clay, you can reach him at 713-858-9666 or by email at cbohannan@elgloans.com.

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