Prepare your buyers to be mortgage-ready
How can you help your buyers become more “mortgage ready”? And what does that actually look like? Is it only a letter from their lender?
At eHome America, we really believe that being “mortgage ready” goes much further than receiving a pre-approval letter.
We want Lenders to be as prepared as possible for successful transactions. Educating your clients on best practices and how they can make their own lives easier is the key.
So, what advice can Lenders give to their investment?
Prepare Your Credit
Credit is always repairable and it’s important to us that our partners have professional relationships with credit repair companies to refer their clients to.
When you meet a client who needs substantial credit repair, remind them that this process takes time and can take 12 months or longer. Reassure them that this is an industry standard and just a part of the process. Once you’ve established this understanding, you can refer them to “your credit guy” to help through that process.
In a year, you will have a client ready to go.
Make sure your clients understand that the better their credit is, the better their rate will be, which translates into their overall monthly expense.
Start Saving 6-12 Months Prior
Save, save, save! Buying a house is an investment and buyers need the capital to even think about jumping in.
Do the math for them. Take out a calculator and ask them the price of homes they are interested in.
Calculate what their desired down payment percentage is from that amount and ask they are prepared right now to pay that in cash. If they aren’t, it’s not the right time.
Know Your DTI
How much debt do they have? And how much income do they have? This will ultimately be the deciding factor as to whether they are approved for their loan or not.
Making sure that they have a clear understanding that this ratio needs to be in a certain area, sets them up for success and gives them realistic expectations.
Do they need to be paying down debt for the next 6 months before any further steps are taken?
What is the amount of the house they want? Will their debt prevent them from qualifying for it?
Having honest conversations while guiding them in the right direction will position you as the expert while also building much-needed trust with the client.
Know What You Can Actually Afford
Once your buyers have established their credit, built up savings, and know what their debt-to-income ratio is, they’ll be able to clearly take a look at what price range they are able to afford.
Things you’ll have an understanding of:
- The down-payment amount you want and are able to put down
- Your monthly budget for a mortgage payment plus mortgage insurance, interest and taxes
- The maximum loan amount you are able to get
- The amount of money set aside to pay for: unrequired inspections to put your mind at ease, repairs the sellers are not willing to make and any renovations you will want to do
In order to avoid instances where the cost is higher than expected or clients have not thought this entire process through, setting clear and upfront expectations will always be what is best.
Do Your Research, Come Prepared
There are many different types of loans out there, but not all loans are made equal. Each loan has a specific purpose in mind and helps different people in certain situations.
It is important for you to know which loans are the right ones for you and which ones are not. It’s also crucial for you to know why certain loans are not for you.
Just as you would walk into a car dealership knowing exactly which car you want and why, you need to know which loans are available and what will be most helpful for you.