Category: Lending

Getting Your Buyers Pre-Qualified for a Mortgage

Marci Sepulveda Leave a comment

As any real estate professional knows, the lending landscape is always changing. While there were a number of years when it was very easy for homebuyers to secure a mortgage loan, mortgages are now under more scrutiny than ever, with tight regulations in place to help keep banks sound. Because most of your home buyers will need to take out a mortgage loan, it’s important that you have a working understanding of the process. 

The Difference Between Pre-qualified and Pre-approved

There are differences between getting pre-qualified and getting pre-approved for a mortgage. It is important for you to be aware of these.

Getting pre-qualified for a mortgage is an initial check-in to get a preliminary estimate from a lender of the mortgage your client will probably qualify for. It helps guide the home search process by narrowing down to the range that they will likely be able to borrow. It’s the first hurdle a borrower must clear.

Getting pre-approved for a mortgage happens further down the road in the lending process. It requires an even closer look at your client’s income, debts, assets, and credit. While still not an assurance of obtaining the mortgage—pre-approval is the second hurdle in the process, and brings the client one step closer to a successfully closed transaction.

Why It’s Good to Have Pre-qualified Clients

While getting your buyers pre-qualified for a mortgage does not carry the same weight as getting them pre-approved, it does serve as the initial guide post for making sure that you are selecting homes that are realistically in your client’s price range. You may of course have to narrow home selections even further once the financial options and constraints become clearer, but it’s a great place to start.

One of the most frustrating things for agents is working with buyers who have not yet been pre-qualified for a mortgage. You take buyers to see a number of homes, only to find out that they are not likely to get approved for the mortgage that is required to purchase those homes. This is why it’s helpful to be working with pre-qualified clients from the get-go, or for you to urge your buyers to get pre-qualified early in your business relationship.

Advice You Can Offer At This Stage

So then, as an agent, what advice can you give at this stage? How can you help raise your clients’ chances of success at the pre-qualification stage? Let’s look at three effective pieces of advice for your clients at this point in the process. 

#1. Recommend a Credit Review

One of the first steps toward getting pre-qualified, as well as knowing the types of houses your buyers should be looking at, is for them to know where their credit rating stands. If not already done so, recommend that your buyers review their credit report and check their FICO scores to uncover any potential issues or mistakes, and determine if they need to build their score before searching for a home. 

#2. Urge Them to Fix Credit Errors Quickly

If mistakes are found in their credit history or on their credit reports, your buyers will want to resolve them before moving forward with getting pre-qualified for a mortgage. Have them contact the credit reporting agencies immediately if any errors are found. Mortgage companies that want loans to close on time may offer to pay credit agencies to update your buyer’s credit report quickly with a rapid rescoring service. 

#3. Remind Them to Be Realistic

It’s not uncommon for lenders to pre-qualify or pre-approve applicants for a mortgage that’s more than they can afford. Make sure that your buyers aren’t letting lenders dictate how much they spend on a home. Lenders determine pre-qualifying amounts based solely on income and credit report information, and don’t factor in day-to-day expenses such as daycare, car payments, groceries, insurance, and more. Rather than purchasing a home for the maximum amount allowed by the lender, make sure your buyers are making a smart investment by purchasing a house that is within their means. 

As an agent, although you are not a loan officer, you still play an important role in the mortgage process. To learn more about what you need to do to help keep the sale on track, check out our course Guiding Your Homebuyer Through the Mortgage Process today. 

AgentEDU® is a platform where agents at every level can come to watch 10-minute video courses for the many situations that successful agents must master. From essential to advanced level and everything in between, AgentEDU® courses help agents become top producers with increased earnings and a plan for continued growth. For a 7-day free trial sign up here.

AgentEDU® is an Agent Publishing brand. For nearly two decades, Agent Publishing has been committed to providing residential real estate professionals with the information and training required to build successful and meaningful careers in their local markets. Agent Publishing’s influence extends to every career stage and reaches agents across print, digital, events and online learning.

couple discussing mortgage with a lender

How To Stay Current on Real Estate Financing Options

Marci Sepulveda Leave a comment

As a real estate professional, you know that your clients expect you to help them understand every aspect of buying or selling their home, including financing. And even though your clients will also be working with a lender in the sales process, it’s still always a good idea for you to have a basic understanding of the lending process, how financing works, and what may be some of the better options for your clients to check out.

Remember Your Industry Role

While it’s important to remember not to represent yourself as a financing expert or financial professional (as these roles have their own licensing and education requirements), and certainly not to unduly steer or influence your client’s decision-making process in this area — you certainly can play a reasonable and prudent role in raising awareness of potential options to consider. There is nothing wrong with sharing knowledge and informing clients in a general way.

Get Comfortable with Numbers

Some real estate professionals find this particular aspect of the industry intimidating or off-putting — especially if they’re not a fan of numbers or math, or they simply don’t feel confident that they can obtain a full understanding.

Even though you may need to overcome some mental hurdles, one of the best things you can do for yourself and your business is to get educated on this aspect of home ownership. Yes, it is sometimes overwhelming and complicated for most of us, but if you take just 15-30 minutes each day to do a little reading or talking to a lender, the knowledge really starts to add up and the learning accelerates. Start small, but be consistent.

There are many free resources available on the web, many books on the topic available at the bookstore, and many formal and informal sources of education that you can find.

Add Value to the Client Experience

In your local market, your awareness and ability to educate your clients on their many lending options can serve as a tremendous value-add to your positioning as the local real estate expert. As someone who works with both home buyers and lenders all of the time, the information that you gather and the advice you can offer in this area is huge. So what should you do?

Being a mortgage lender isn’t your occupation. And, with the lending industry changing rapidly, how can you stay up to date? With this in mind, let’s take a closer look at 3 ways you can stay on top of lending practices and the loan types and offers that are available in your area. 

#1. Explore Continuing Education Options

Seek out “lunch-and-learns” or other educational opportunities that are hosted by mortgage lenders — at lending institutions, local universities and libraries, or your local Realtor® association and other trade group offices. These opportunities can be a great way to stay on top of new trends or offers in financing, while also allowing you to get to know others in the industry. Attend sessions for first-time homebuyers and consumers, where you can both gain knowledge and meet potential leads.

#2. Show Your Inbox Some Love 

Sign up for helpful newsletters and informative emails on the topics of lending, financing, and mortgages. Create a folder in your mailbox and automatically filter these newsletters from your inbox to this subfolder. Then, when you have time, read through the newsletters and you’ll likely be surprised at how much you can learn.

Other things you can save to your email folders are the lending contacts that you accumulate in your work with clients, so that you can reconnect with them when it makes sense to do so. You can also save information about financing options for specialty market segments — such as veterans and seniors. These groups in particular may benefit from special offers, but may be unaware they exist or be overwhelmed by the choices or details.

#3. Network, Network, Network 

Network with local lenders and mortgage officers to stay up to date on their most recent programs and offerings. In some cases, lending programs aren’t advertised widely or are local in nature. They may pop up quickly and be offered for a limited time period. A client who is able to save thousands or tens of thousands of dollars on the financing of their home — simply because you made them aware of an option they had no idea existed — is likely to become a long-term client and also give great referrals.

Remember, a lender will be involved in nearly every home sale in your career. If you haven’t already begun to cultivate relationships with local lenders, start now. These relationships can dramatically add to your success as a real estate professional — and your client’s overall satisfaction. 

For more information on the financing process and how you can help serve your clients, sign up for our AgentEDU courses Real Estate Mortgage Basics and Guiding Your Home Buyer Through the Mortgage Process today. 

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AgentEDU® is a platform where agents at every level can come to watch 10-minute video courses for the many situations that successful agents must master. From essential to advanced level and everything in between, AgentEDU® courses help agents become top producers with increased earnings and a plan for continued growth. For a 7-day free trial sign up here.

AgentEDU® is an Agent Publishing brand. For nearly two decades, Agent Publishing has been committed to providing residential real estate professionals with the information and training required to build successful and meaningful careers in their local markets. Agent Publishing’s influence extends to every career stage and reaches agents across print, digital, events and online learning.