Profile picture for dnmlaflamme

when should I hire a realtor?

I am looking at submitting my mortgage application in January after i file tax returns ( I was told i need my 2013 taxes for underwriting)
My problem is one realtor I was considering using wants me to wait till i submit for per-approval before showing/ finding me property.
What concerns me is if i wait to line up candidate property until i submit and receive approval, I would then be locked into making a fast decision on the property i want to buy because of the 30 day approval period? and also limiting my search to just a few weeks.

The paradox I am confused with is as follows: two loan officers i spoke with said i need to submit my mortgage application WITH a property address, and a contract (meaning a property i have put a deposit on) for them to qualify me for....but realtors want to make sure i am per-approved (not pre-qualified) before engaging with me.

Both sides want the other to do their job first....whats gives?? what am i missing here? how do i proceed?
  • November 23 2013 - US
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Answers (9)

My mortgage broker gives a pre-qual and notes any exceptions.  If the final approval is based on the 2013 tax return she would state it.  That way I'm able to advise you how to structure an offer.  Providing that is the only exception.

The Realtors have to know the difference between pre-qual and pre-approval.  Find one who does and is willing to enter into a buyers agency with you and work around your time frame.

The mortgage application and subsequent mortgage approval comes after you find the house.  Most contracts require that you apply for the mortgage within 5 days of contract acceptance.  Those dates can be changed with the permission of the seller at the time of contract.

Problem is that a home going under contract now would normally close by the end of January or earlier.  In your instance you have to wait till the end of February or possibly March to close.  The bank will want to pull your tax return from IRS directly.  Not accept a copy from you.  IRS will not be quick in the height of tax season.  They might cause a delay. That means you may not be able to offer a closing date much before the end of February.  

Is a seller going to be willing to take their home off the market that long and hope you will be able to close?
  • November 24 2013
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Profile picture for Jesse Storm
Pre-approval is all I as a Realtor ask. I have a rule that I go buy. That is as follow's new client comes in and we sign a buyer's agency agreement. I now work for them. Next step is I take ask what the yearly income is. I take that number and multiply it by 3 that is a good round number for what some one can buy. I have no problem setting up a Saturday at that point or an evening and picking out 3-4 houses whit my new client and we go out and take a look at what they can get for there money in that price range. Next step is to talk to your lender or my lender that I work with all the time. We get the pre-approval that comes from running desk top underwriting. This will say that based on the info give at this point you would be pre-approved for a home purchase at about x dollars. Then we go out and find a home that you want to buy. That might even be one of the 3-4 that we already looked at. We then make an offer and provide the pre-approval to the selling agent with our offer. We then nego. the offer to get the best terms that both parties can live with. Then in PA on our contracts you have 10 days to do a formal application with your lender for that home. We then ask for the bank to give us a commitment letter with in 15 days that they have approved you to buy the home. This letter may list some conditions you and the lender may have to do prior to closing. Once we clear all conditions we go to closing. In the mean time you have your home inspection and nego. repairs and have your appraisal done on the home. [Content removed by Zillow Moderator. Please see our Good Neighbor Policy]
  • November 23 2013
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I sense a misunderstanding.

A pre-approval requires simply a cursory examination of your finances. Loan application requires a property address. In between, you're looking at houses and making offers.

I don't think it really matters whether you start with a loan rep or a real estate agent, you will need to be pre-qualified and you will need to see houses before you can buy one!

All the best,
  • November 23 2013
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Profile picture for SoCal Engr

Your question, and the responses, interested me and I did some quick searching on the Internet. The responses you've been getting are primarily from REAs, and I was interested in the mortgage lender's perspective.

The short version is that some of the "pre-approvals" offered by "large lender websites" is essentially the same product you described in your response on this thread (actually, potentially much less).

I understand the REA desire to not show you properties that you have no hope of qualifying for. It is a waste of time (both yours and theirs) and will likely do little other than to cause you to be unhappy with what you can actually afford.

But, and it's a big but, the REA is there to provide a service. If you have provided tax returns, W2s and bank statements to determine how much you should qualify to borrow, and had a credit check pulled to make sure there are no credit-associated show stoppers, that seems like it should be enough. In other words, it provides a decent idea of what you can actually afford (although I would personally never share the whole information with a REA).

Based on articles about the subject of pre-approvals, which a posted links to here, it's possible that the REAs are demanding something that is one-step-too-far. If you've done your due diligence, met with a lender and provided docs to determine a reasonable loan amount you would qualify for, it sounds like this should be enough.

As to your question on "Both side wants the other to do their job first...whats gives??"

My personal opinion...

The REA wants 100% assurance that the loan will fund/close. But, they cannot force the lender into providing a pre-approval. If you've gone through the tax return, W2, bank statements, credit check, etc. with the lender and the REA is still balking and won't budge...find another REA.

  • November 23 2013
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Getting pre-approved for a mortgage should be your first step, if you are pre-approved then you start looking within the price range given by the lender.  Pre-approvals are good for 60 days, that should give you sufficient time to look for a property.  I do not know why you need to wait until January to receive pre-approval?  Lenders ask for the last two years of IRS returns if you want to be pre-approved today, you need 2011 and 2012.   In order to obtain a mortgage you need to submit the purchase and sale agreement, but at the moment what you need to know is if you qualify to purchase a property and for how much. 
  • November 23 2013
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Hi There...
Yes I would  say the majority of "Buyers Agents" will need your Pre-Approval to begin working with you to find a suitable property. The reason for this, is that without a clear and solid understanding of what you can comfortably  afford, looking at property is a futile exercise for everyone.

Your Realtor does not want to add additional stress by showing you homes that are well beyond your ability to afford and you do not need to waste your time looking at them.

 Most Pre-Approvals are good for 90 days and if you need another one, (once you are initially approved) the loan officer will provide one to you. You are not "locked in" nor are you limited to a certain time frame.

Once you have a target property in mind, your Realtor will let your mortgage professional know, and you can proceed  with  your loan officer.
  • November 23 2013
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Profile picture for JoshBarnettREIB
You will not be locked into making a fast decision, your approval is good for 60 days (verify with your lender) and that is plenty of time to find the right home.  Your Realtor is correct, wait, houses on the market today, most likely will be SOLD in January, you do not want to find the right one but not be able to buy because you cannot prove to the seller your approved.  Just wait, you will not be rushed, if you are rushed, then change Realtors, but not right now, your Realtor is correct.   
  • November 23 2013
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Profile picture for dnmlaflamme
Thank you Karin,
I was pre-qualified, I submitted tax returns(2 years), pay stubs, bank statements (3 months), to date yearly earnings, and credit score(pulled from a bank 3 months ago) along with credit reports i got myself (To avoid additional pulls).
Both loan officers advised me waiting until January for a fresh tax return, and my down to be "seasoned" before submitting to underwriting. I also have commissioned income, which was also the impetus for waiting for an additional tax return.
My target price range is about 70% of what i would qualify for......So my original question still stands, regarding the pre-approval.
So in essence, i was pre-qualifyed with the addition of my tax return verifying my income.
  • November 23 2013
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Getting pre-qualified  for a mortgage should be your first step.  Why?  Because it allows you and your buyer's agent to zero in on the properties that best meet your needs financially as well as physically.  You will spend your time in the most efficient manner and avoid the disappointment of looking in the wrong price range.  Most lenders in my area will pre-qualify you at no cost and can give you a very close estimate of your monthly payment and your closing costs.  A pre-qualification is done by a loan officer and is his opinion about your viability as a buyer.  It is NOT an underwriting approval. Be sure you go to someone with a good track record who will not just write a letter and hope for the best, but will examine your current financial position and give a valid opinion.  And, don't let anyone push you beyond your comfort level for a monthly payment - it is not worth the stress in your life.

Good luck and enjoy the home buying process!

  • November 23 2013
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