Home is where the heart is, but the process of buying a home can be far from a lovely experience. Choosing the right partners really sets the tone for your home buying and selling journey. We've broken down some key things to look for, ask about or consider when you're trying to choose a real estate agent and a mortgage lender.
The very first thing to do, even before jumping into property searching, is to check your credit score. Once you know your score, you'll know if you need to do a little work or if you can continue what you're doing to maintain it. When you're financing a major expense like a home, even a small change in your interest rate can have major consequences over time. And with just a little tweaking, you can adjust your score for the better. Want more tips on building credit? Take a look at our previous post on boosting your credit score.
Choosing a Real Estate Agent.
Phone a Friend
When you're looking for an agent, testimonials are a goldmine of information. If you have friends or family in the area that have recently purchased or sold a home, ask them who they worked with and if they had a good experience. Online reviews are another great source to check out. Look on reputable sites like Google reviews, Yelp or even the business page on Facebook to see what clients have to say. The agent may also have some testimonials on their site or can give you a list, but keep in mind that they have more control over those resources.
What should you look for in the review and what should you ask a previous client? If available, see how your budget or property compares to that of the reviewer. You want to work with an agent who understands you and your needs, so this can help you identify an agent who excels with similar budgets or properties. Another thing to research is how long it took for the house to sell or for the agent to find the reviewer their perfect home. One of the most frustrating things in the process can be a miscommunication of expectations or timelines, so doing this research up front can save you from a lot of headaches down the road.
Check Licenses and Credentials
A professional agent should have all their licenses in order and active. The Illinois Department of Financial and Professional Regulation (IDFPR) manages licenses and makes it easy to look up a person's or business' status on their website. You'll want to see if your potential agent is licensed and if there has been any disciplinary action or complaints filed. If they don't have their license or there's been a disciplinary action or complaint, it should be a big red flag.
In addition to the license and basic certification, agents can get additional, more specialized certifications that might bring you some added value. For example, a Certified Residential Specialist has completed additional training specific to residential real estate. An Accredited Buyer's Representative is trained in representing buyers in transactions. And a Senior Real Estate Specialist is trained on helping buyers and sellers over the age of 50. Additionally, if the agent uses a capital "R" in realtor, they are a member of the National Association of Realtors and have formally pledged to a code of ethics. Ask your potential realtor if they have additional certifications or look for them listed on their website.
Ask about Nearby Houses for Sale
You know you're itching to start checking out properties, so now is a great time to search for an agent's listings. One thing to note is the level of polish and professionalism in their online presence. If they've taken the time to present a well thought out website, it's a good sign that it will carry over in their other business operations.
Take stock of how much business it looks like they're managing. If it seems a bit out of sync, it could mean that you're not going to get the attention you deserve. Also, see if they have properties listed that you would actually be interested in or that are similar to the one you are looking to sell. Again, you want an agent who is great with your specific needs.
Choosing Your Mortgage Partner
Programs from A to Z
There are a lot of programs available to home buyers and finding a mortgage partner who is well versed in the different programs is worth the effort. Many are designed to help you with a down payment, give you flexibility in payment options, or provide benefits when you opt in to certain purchases. When you're choosing a mortgage partner, ask them if they can help you save money and choose a partner that proves to be knowledgeable.
One option to know about, especially if you are a first time home buyer, is FHA. The Federal Housing Administration (FHA) guarantees a portion of home loans and makes it easier for you to get accepted. With this program, you won't need to put as much money down, helping you afford your first home.
Another popular program is for veterans. The US Department of Veteran Affairs has a generous program that may not require any money down or require mortgage insurance. When you're looking at the final bill, insurance can add a lot, so that alone makes a big difference. If you are a service member, veteran or surviving spouse, make sure you ask about this option.
Two other popular programs are based on purchases for your new home. Interested in energy efficiency? You can get energy efficient mortgage programs that add benefits when you make energy-saving improvements. The benefits include flexibility in the loan limits, which makes it easier to purchase your improvements. The other is HUD. Chicagoland is full of fixer-uppers that just need a plan and a dedicated owner to bring back the sparkle. HUD takes into account what the value of the home will be after you're done with renovations, making it easier to finance your new home and the additional work.
Apples to Oranges
Not all lenders are the same and knowing what to look for and what to ask when you're comparing potential partners will help you make the best choice for you. The first thing you should ask about is communication. Can the potential partner communicate in your preferred method? Whether you'd rather work over email and scan things or stop in to your lender's office, you'll want to make sure that the process will go smoothly.
Also ask about the timeline, especially the turnaround time for pre-approval, appraisal, and closing. If you're working on a personal deadline, say you have a baby on the way or are relocating, a difference of a few weeks may be a deal breaker. Keep in mind that some programs, like the VA program, will add additional processing time that you'll need to account for.
We know that reading fine print is a bore, but power through the yawns because this is where things can take a turn. Unlike a personal loan, there is a lot more involved in a mortgage than principal and interest payments. Some costs to compare include estimated closing costs, loan origination fees and transaction fees. Also note whether there are contingencies based on things like home inspections. The additional costs can all add up, so make sure you understand what else is being tacked on to the mortgage and ask if there are any ways to have fees covered. In some cases, the lender may have ways to waive certain fees.
Remember, you should work with a partner that you trust. If you ever have a question, don't hesitate to ask so you can feel confident in your decisions and so you won't be surprised down the road. Buying a home can be an incredibly exciting journey and a good partner can offer advice specific to your needs and help you celebrate when you get those keys.