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TENANT SCREENING TIPS

Mario Gonzalez - Thursday, December 13, 2018

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Hey, Mario Gonzalez back with you. On this blog we’re going to talk real quickly about tenant selection criteria. I’m going to give you six major points and at the end I’m going to talk about the warning signs that are there for trouble tenants that you really should look out for.

THE CREDIT SCREEN:

So the first thing is the Credit Screen. Now, a lot of companies will say, “oh yeah, we’ll tell you the credit score”, but that doesn’t tell you if they’re rising from, you know, a 600 credit score doesn’t tell you if they’re rising from the ashes or if they’re crashing from 850, it really doesn’t. You need a full credit screen. So just like they would if you’re making a major purchase. That full credit screen will show you everything they have, 30, 60, 90 past due or credit now, it will show you all the way back to seven years. It will check both the installment accounts and the revolving accounts, the big ones and the little ones. You can look for past due, collections, any repossessions they’ve had, foreclosures, everything. And also, you need to check bankruptcies. You do not want anybody with an open bankruptcy because they can tie the rent into that.

CRIMINAL BACKGROUND:

The second thing is your criminal background and the criminal background shouldn’t just be a local record search, it should be a national records search. So you’re looking criminal background, both misdemeanors and felonies, sexual predators, eviction history, all very big. And you have to be very careful how you screen tenants with regards to criminal activity now because of this impact. We have a whole other blog on that.

EMPLOYMENT:

The third thing you need to look for tenants is their employment. Is their employment current right now, do they have pay stubs that they can show you. If they’re moving from out of town, you need to really look and see what does they’re employment guarantee their pay to be right now. If they’re self-employed you really need to look at pay stubs, bank records, tax statements, and all that kind of stuff to really prove they can pay for the home they’re looking to rent.

PAST RENTAL HISTORY:

The fourth thing is if they’ve been a renter before you want to look at their past rental history. And the past rental history isn’t just the last place they lived, it’s the last few places they’ve lived. And you want to really, you know, just because they gave you a number for the past landlord doesn’t mean that’s the past landlord, so do your research properly. Go through that last landlord company. Do your own research to find that number and then come out there and check back. You should have something that they can fill out that says ‘did they pay on time, were they ever late, did they ever bounce a check, did they ever miss any payments whatsoever, did they fulfill everything that was on the lease, how much was the rent that they paid, how much deposit did they have, how much deposit did they get back, did they damage the place, did they have any pets, did the pets damage the place, you name it’. We have a very long form and I’m happy to send that over to you if you like, free of charge, if you want to know how we look at past rental history. Another thing is you want to look at their pets, do they have pets. You can do a full background on pets alone. There are online services like Petscreening.com that will tell you things like ‘do they have their shot records, do they have their owner records, photo, size, weight, type, any history of biting or any violence whatsoever’, so you really need that in today’s world of assistance animals, service dogs and all that type of stuff. We have a whole other blog on that as well, but you really need to do some sort background on the pets they’re going to be bringing into the home and animal screen the home.

FAIR HOUSING RULES:

The sixth thing here is fair housing rules. If you, as a property manager or a DIY landlord, own more than four homes or you’re a real estate agent and you’re managing just one home as a licensed realtor, you have to follow all the fair housing guidelines. That’s a three hour class in itself that’s taught to a real estate agent. There are a ton of them out there and, again, we have a whole other blog on how to abide by fair housing, but it’s tough to do here in two minutes, but you have to abide by all the fair housing guides.

WARNING SIGNS TO LOOK FOR:

Now the last thing I’m going to tell you is some of the warning signs you look for bad tenants. If they come to you and say, “Hey, I have full cash, I can pay cash up front right to you for the entire term of the lease”, there may be some warning signs there. If they have an urgency, “I have to move right now. My owners selling the property, it’s closing right now”, whatever, if there is a huge sense of urgency to get into a home then that may also be some warning flashes. So slow down and make sure you screen everything properly. Some other warning signs if you’re doing any of this background, look at social media, there’s so much out there you can just do with a Google search or an online search you can do of somebody outside of these things that will throw up some flags for you as well. So, that’s it in a nutshell. We have a ton more blogs. If you have any questions whatsoever, feel free to contact me anytime, I’m happy to answer your questions.

7 TIPS FOR SELECTING THE BEST PROPERTY MANAGER

Mario Gonzalez - Monday, December 3, 2018

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Hey Mario Gonzalez here. We get this question all the time so I figured I’d put it in a video. “How do you as an owner get the best property management company for your rental home or investment portfolio?” Well, it’s not as simple as you think so I’m going to give you seven things you really need to look at before you pick a property management company. What most people do is go to social media and ask a friend, “Hey, do you know anyone or have a recommendation?” Well, just know there are limitations to that. You’re talking about one person with one home and one management company and they’ll let you know honestly how it went, but that doesn’t give you a broad enough look to know how they handle things on the grand scheme. So we’re going to give you seven things you can really arm yourself with to select a property management company.

#1 LICENSE AND QUALIFICATIONS: 

Are they licensed and qualified to even manage homes? So, all real estate agents are not qualified to manage homes, but every property manager should be a licensed real estate agent. Then you ask them ‘what kind of qualifications they have, how long have they been doing this, how many employees do they have, how many people will you contact, how many homes do they manage, do they do tenant placements, do they do evictions’. You want to know what all they do, what they’re qualified to do (commercial/residential/HOAs), do they do collections, etc.” You want to ask all of those questions. You also want to know ‘what their rates are, what kind of vacancy rate do they have, what kind of eviction rate do they have’. They may have been doing this a long time, but if they’re evicting one of every four tenants, that’s probably not a great thing. What kind of credit selection do they use? So, you want to ask all those questions to really kind of qualify and make sure that they’re properly licensed. Now, one thing you can start doing online, and this leads to part two, is researching what kind of certifications and designations they have.

#2 PROFESSIONAL DESIGNATIONS:

You can look for people who are only certified property managers or have been designated as certified property managers and you can find the CPM, the RMP (Residential Management Professional), MPM which is Master Property Management and is the highest certification you can actually get in the property management realm. So, look for those people who have a Master Property Manager designation. That’s going to be your top tier.

#3 INDUSTRY AWARDS:

The third thing is what kind of awards have they gotten, have they gotten any awards at all. If they have gotten awards like the Property Manager of the Year Award, the Property Management Company of the Year. What awards have they gotten that says, “Hey, not only are we licensed and designated to do this, but we’re getting awarded in our industry to do this.”

#4 PROFESSIONAL ASSOCIATIONS:

So, the fourth thing you’re going to look at is what kind of professional affiliations does this company that says they’re going to manage your home belong to. Where are they getting their information, where are they getting their continual education? They need to be affiliated with professionals and like minds across the nation that are in the property management realm. So, in the residential side here you’re going to look for what we call NARPM, and in the commercial side you’re going to look for IREM and both of those deal with ‘what’s changing in codes, regulations, laws, you name it, policies, directives, governing directives, and what is changing. They will constantly educate those professionals that are affiliated with those organizations. And if a property management company isn’t, then they’re really kind of doing it in the dark and blind about it and it’s like ‘oh, yeah I’m managing homes, but I’m really not staying educated about how things are changing’ and that brings more risk to you as the owner. So if you want your risk lowered you need to have a property manager with a higher education and be affiliated with these groups.

#5 ONLINE REVIEWS:

Now in part five you’re looking at the reviews. What do other people, not just one person, but what are other people saying across the internet on this company? So, when you look at reviews there are two different things you look at. One is an owner review, then there is a tenant review. You want to know ‘hey, are the owners happy’ and that’s the main thing. A tenant, often times, when they’re held accountable they’re not so happy. They’re not so happy when they move out and leave the home wrecked and the property manager says, “you know what Mr. and Mrs. Tenant, you’re paying for all that”. The tenant may very well go online and leave that negative review. It’s okay. The property manager is doing the job for you, the home owner, and that’s who they work for, they don’t work for the tenants. So look at the reviews, but differentiate from the tenant versus the owner. There should be some negative reviews in there. Nobody has a 5 star review, and know that Google reviews and Facebook reviews are pretty easy to look at. Some of the Yelp reviews get buried, some of the good reviews, so you have to click the little ‘see more reviews’ to see those type things.

#6 POLICIES, PROCEDURES, & AFFILIATIONS:

Alright, number six. You want to really dig in now. You’ve gone into the first five things and you’re talking to a property manager really you want to get to the nuts and bolts. What kind of policies, what kind of procedures do they have, do they rent a home before it goes vacant or after it goes vacant because after it goes vacant it’s easier to show, but you’re paying money. You’re paying the lights, you’re paying the mortgage without anything so you need to ask those questions. What do they charge for, what does their fee structure look like, what kind of professional affiliations do they have. Are they linked with lawyers, and title companies and vendors that are all licensed and insured? Who’s doing the work on their home? You really need to dig in and ask about that policies and procedures how they manage your risks because that’s what they’re doing. A property manager should reduce your risk.

#7 PRICING & FEES:

And then the final thing, and this is the minimal thing, is the price. Be very weary of those companies who say, “hey, we’ll manage your home for a ‘teeny tiny’ price” without thoroughly looking at the scope of services. I’ve been managing homes for a long time and I will tell you if there is a ‘teeny tiny’ price then they’re most likely giving you ‘teeny tiny’ service that’s not going to match with the policies and procedures of the companies that are professionals and they do this and they’re in the trenches each and every day. They may collect the rent for you, but that’s it. You need to ask if they have “boots on the ground” in your area. Can, they go out and see that home, can they answer questions directly with the tenant without calling that 1-800 number, etc. If not, you really need to think if that’s right for you. But then again, always, price is going to increase with the level of services that you get, that’s just natural. But look at all companies comparatively. You don’t have to look necessarily at the highest, but look at companies that are offering a good deal of things in their policies and procedures I just talked about for an equitable price.

That’s pretty much it in a nutshell… the seven things. License & Qualifications, Certifications/Designations, Awards, Professional Associations they have, Reviews out there, and then the Policies and the Price. So take a look at all those things and you’ll know ‘hey, is this property management company really right for me’. If you have any other questions, feel free to either see some of our blogs or call me direct at the number on your screen.

What if Your Tenant Pays Late

Mario Gonzalez - Monday, August 22, 2016

Hey Mario Gonzalez here with Navy to Navy Homes with some more property management tips for you. A question we get all the time from DIY Landlords is, "how should I handle late payments?" This is not if your tenant has completely stopped paying, I just mean a normal late payment. So let's talk about that. If you would like to know more on this subject, if your tenant stops payment, you want to get him out of there, please see our blog on, "when a tenant stops paying all together" or "how to evict a tenant," we have information on that.

WAS THERE NOTICE?

So, the first thing if a tenant is late, the question should be, "did they notify you as landlord? Did they let you know of some extraordinary circumstances coming up? Hey, they're traveling, they're this or that, they had some unexpected expenses come up?" That type of thing.  If so, then you may want to communicate to your owner or if you are the owner, you may want to take exception to that to some degree, and I’ll explain how to do that right here at the end.

 

CONSULT THE LEASE

The second thing is what does your lease say? Do you have a written lease that tells them exactly what, what's going to happen when they're late, and what the circumstances are, are there late fees, etc. So if you have a written lease, then definitely stick by that. However, there is a time that you can really use this to build a relationship.

SPECIAL CASE SCENARIO

So let's use a special case. Let's say, it’s around the holidays. They had a child get sick, they had a car accident, they were hospitalized. We've heard them all, and we've seen them all. What I will say is, if you're going to take an exception for one time, say, "I’m going to allow you to pay rent this one time, late, but never again," then I would definitely say you need to follow up in writing, give them a one-time written late rent abatement form that says, "we've accepted it this time, and never again shall we do it." But, let them know that you understand, let them know you're people too and you understand their circumstances and most of the time, those people will pay the late rent. They will pay the late fees as well and they're very accepting to know that you are not going to end the lease, you're not going to give an eviction notice; you are open, willing and accepting of their circumstances. And this is a really rare case where you can build that relationship. Part of owning a rental home allows you to build a relationship with that tenant. Even though it may be, estranged a bit, or distance your property manager in between. But if you use those, all those connections to really build that relationship, say, "hey, I’m an owner and I hear and understand exactly what you're going through," then a late rent, so long as they pay and catch up, again, can be a fantastic way to say, "yes I understand" and actually build that relationship.

FINAL THOUGHTS

So again, we’re not talking about if a tenant stops paying all together. We're just talking if they're late, Just a sideways error. So if you have questions about evicting a tenant or a tenant stops paying all together, please see our other blogs, we're happy to give an information and at any time, feel free to call us here at Navy to Navy, we'll give you any property management advice you like. Thank you.

Carpet vs Tile in a Rental

Mario Gonzalez - Thursday, August 11, 2016

Hey good morning. Mario Gonzalez here for Navy to Navy Homes. Today’s blog we will answer the “Age Old” question from Landlords – Should I put down carpet or should I put down tile? Well if you’re going to make any improvements to your home, you might be surprised to know that the price can be much closer in carpet and tile than you really imagine.

PRICING: TILE vs CARPET

For instance, when we advise people, whichever way they’re going to do, if you’re going to put down carpet, then spend the majority of your money on the actual material itself – the carpet you are selecting and the padding you are selecting because that will help ensure the longevity of it. Conversely with tile, you really want to spend the money on installation, because you can have a great tile, very expensive product, but if its crummy installation, then you’ve really kind of shot yourself in the foot. Likewise, you take a less expensive tile product and really do a lot with the installation. You can angle it, you make like different patterns, etc. that people will do, you know staggered, or you can even have tile that looks like hardwood floor.

CLEANING PROS & CONS

So anyway, a little bit more about the carpet versus tile. You can clean both. You can clean carpet overtime but it is hard to overcome traffic wear patterns. You can also have tile and grout cleaned by most professional floor cleaners or carpet cleaners. What we do see is in on average, tile will last much longer than carpet. However, you’re about 50-50 on what people like.

WHAT TENANTS PREFER

The majority of people like carpet in the bedroom – it keeps the sound down in bedrooms, and if you just carpet the bedrooms, then it’s much easier to replace if there’s any damage or anything like that. It also keeps the people from coming out and hitting the cold floor first thing in the morning. The counter argument, is you do have a lot of people with allergies and those people with allergies don’t want any sort of carpet at home. So what we do see a lot of investors– they will put carpet down just in the bedrooms and then all the wet areas and the common living areas will be a hard surface even to, like the hallway leading up to the bedroom.

FINAL THOUGHTS

In your high traffic areas, tile is going to last you a little bit longer. If you carpet only the bedrooms, then you’ve maximized your investment by saying “okay, I can mix and match carpets if I need to.” You don’t necessarily have to, just as long as it looks close. So if you have more questions, feel free to look at some of our other blogs like, getting your home rent ready, some of the best improvement you can do, top tips to maximize your rental and thanks for checking us out here.

WHO PAYS FOR AN EVICTION?

Mario Gonzalez - Tuesday, July 19, 2016

Hey Mario Gonzalez with Navy to Navy Homes. On today's blog we're answering a very important question we get a lot -- "Who pays for the eviction?" That's an important question because it can be very expensive. If you come to that uncomfortable place where you have to evict a tenant, who pays? We'll most more than likely, it is going to be the owner’s expense. Most of the leases are written from the owner to the tenant. So the lawsuit that ensues is actually between the owner and the tenant.

EVICTIONS CAN BE COSTLY

It can be expensive here in Florida. I can speak that the average eviction, uncontested runs between about five to eight hundred dollars; it takes about thirty days from the start to give the eviction process -- thirty to forty days. Now depending upon the way your lease is written, think about the additional expenses in this. The lease is written to maybe give a four-day grace period to pay rent, so it’s due on the first, four or five days and then you have a three day notice, so you're half way into the month before you even start the process -- thirty days after that. When you go through an eviction, you need to worry about the cost of the eviction, and the potential time in this, and losing one to two months of rent at a minimum and then paying to re-lease the home.

WHAT HAPPENS IF IT GOES TO COURT

It can be very expensive to actually perform an eviction. However, there are some companies out there, Navy to Navy, we offer eviction protection for our owners, for our landlords. Basically for a small monthly fee, we'll cover that five hundred dollar amount under fees in the unlikely condition that we have to evict a tenant. Where that helps the owner, is the owner doesn't have to worry about that additional expense -- something goes wrong; tenants paying late; stops paying; they give us permission to say, "you know what, just go for it, get them out of there," and we can do that. However, let me address this piece -- if it actually goes to court, meaning if it is contested and the tenant wants to go to court, then the fees get very expensive. So your lease has to be specific on this. A good lease will say that whoever goes to court, the prevailing party will actually cover the other lease, the other expenses, and lawyer expenses. Well most tenants think that if they drag you to court and they win, that you're going to pay all their expenses -- not necessarily the case. What’s going to happen is, because you're going to be represented by a lawyer, and it’s really going to be expensive because lawyers work by the hour, the lawyer is most likely going to counter sue for something. So you can go back and forth, literally, we haven't seen this tremendous thing. We have great tenants. But I've heard through the industry, that people have racked up ten and twelve thousand dollars per side in legal fees to fight over five hundred dollars. It’s ridiculous.

FINAL THOUGHTS

Aside from that, how do you protect yourself in this? Well, take a look at our other blogs as far as how to screen tenants; how to protect yourself; your investment; what to do if there's late rent; what to do if this tenant stops paying because the biggest thing in this, for eviction, is really to protect yourself upfront. And that is to properly screen a tenant, work with the management company that is very serious about this, that has written guidelines as to how they, procure and screen like residential selection criteria, how they screen the tenants. And you want a property manager that is always engaged during regular inspections; keeping good communication. The owner and the tenant know that they are there all the time. And that really will help minimize your chance of ever getting to an eviction. So please see our other blogs with regards to that, again, screening tenants; how to handle late fees; what to do if your tenant stops paying etc. And at any time, feel free to give us a call. We're happy to help answer any of your questions here at Navy to Navy. Thanks.

When is it time to Hire a Property Manager

Mario Gonzalez - Wednesday, June 29, 2016

WHEN IS IT TIME TO HIRE A PROPERTY MANAGER

Hey, Mario Gonzalez here with Navy to Navy Homes with some more property management tips. Today’s question is "how do I know if it’s time to hire a property manager." We get this call mainly from landlords who absolutely need a property manager now. And what I mean by that, is they probably put a rent by owner sign; or put an ad on craigslist; they didn't qualify a tenant; they got somebody in there and now…the tenant is in there; there's five other people living in the house; there's three cars on the lawn; five dogs; the home is destroyed; and they're not paying the rent. It's an absolute nightmare. So trust me, that is not the time when you need to hire a property manager. Really, the time you need to hire a property manager is pro-actively, to do it before.

WHAT YOUR PROPERTY MANGER CAN DO FOR YOU

Let’s go over some examples. Before you ever rent your home, or make a decision to rent your home, a property manager is going to do their best to help maximize your return on this home, while minimizing any problems or loss you have. They can see loss, any extraordinary expenses, repairs, that type of thing. They're going to help you start off by marketing that home very quickly, so that you don't have the rent loss and you can get a quality tenant in there. They're going to screen those tenants so you don't have the types of problems like the one mentioned above. You're going to have a quality tenant that's caring for your home and can pay for your home. Another thing they're going to do is, and probably the biggest thing, is they are protecting your investment. Your home is more than likely your largest investment, your largest expense or asset. A property manager is going to care for that the entire time. They're going to put a good quality tenant in there, they're going to minimize your vacancy, they're going to minimize your expenses because the tenant is going to care for it, and they're going to check up on the home to make sure the home is cared for. And ultimately, when you go to sell the home, you have a better product because you won’t have to invest a ton of money into the home to then maximize your sale property.

VENDOR MAINTENANCE

The second thing, property managers are just help. If you have that tyranny of distance and you’re stressed about any of the smaller repairs, a property manager is going to do all of that for you. Another thing, a property manager is going to have quality vendors that's going to be working on your home. It’s not just somebody that you're picking at random or doing an internet search on that have no experience. The property manager, if they're managing hundreds of homes, has experience with quality license and insured vendors, and they've probably vetted those vendors to make sure that they're good on their prices. A lot of vendors that property managers work with will actually reduce their cost because of volume and that gets passed on to you.

FINAL TIPS

The last thing that the property manager is going to do, they're going to make sure that all your finances with regards to that asset are kept tip-top so when it’s time for the IRS at the end of the year, you don't have to go scrambling, and figure something out and possibly make a mistake on this. Your property manager is going to do all of that for you.

To recap, the best time to hire a property manager is proactively -- when you make a decision to rent the home. And property managers can either help you just place a tenant, or they can fully manage the home. If you have more questions on this, how to pick a quality property manager, you can see our blogs on that, we got that. We also have, "what a property manager does to market your home," another one, "what a property manager does for your finance." So, feel free to check our other blogs about that and as always, at any time, if we can answer your questions, give us a call here at Navy to Navy, happy to chat about you and your investment.

Is Understanding Costing You Money?

Mario Gonzalez - Tuesday, February 2, 2016

People tend to fear what they don’t understand. Homeowners understand fixed rate mortgages and remember the horror stories of people who lost their homes because they could no longer afford them when their adjustable rate mortgages went up.

Interest rates on fixed-rate mortgages have been so low for enough years, that borrowers haven’t even given much consideration to an adjustable rate mortgage. Changes in the way adjustable rate mortgages are now made make them much safer for borrowers who understand how they work but also know they’ll only be in the home for a limited period of time.

Adjustable rate mortgages can go up or down according to an index that the lender has no control. The amount that can be adjusted is limited by caps for each period and for the life of the loan. While there are different periods for ARMs, the most popular lock the first period for five to seven years and then, can adjust annually after that.

One quick and easy way to determine whether an adjustable may be a viable alternative to a fixed would be to determine the maximum payment adjustments possible to find out when the savings from the early years are exhausted which would be the breakeven point. If the borrower is certain they’ll move prior to that date, the ARM will definitely provide a lower cost of housing.

The breakeven point for a $250,000 mortgage would be 8 years 3 months comparing a 2.9% 5/1 adjustable-rate with 1 and 5 caps to a 3.8% fixed-rate mortgage. In the initial five-year period, the payments on the ARM would be $124.32 lower and the unpaid balance would be $3,522 less than the fixed-rate to make a total savings of $10,981.

Whether you’re buying or refinancing, get some good advice from a trusted lending professional about the adjustable-rate alternative. If you’re only going to be in the home a short time after the mortgage is made and your tolerance for risk allows you to feel comfortable, the ARM may be the best choice for you. Check out this  ARM Comparison to use your own numbers.

What's That Smell?

Mario Gonzalez - Tuesday, January 26, 2016

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Homeowners may be totally unaware that their home has an unpleasant odor. It can be unrecognizable to them but immediately apparent to visitors on entering the home.

Candles, aerosol spray or even chocolate chip cookies can’t get rid of the smell. To eliminate the odor, the source of the smell first has to be removed and then, the affected areas can be treated.

Cigarette smoke is particularly offensive to people. It is very common for buyers to refuse to even consider looking at a home where smoking is allowed. This odor permeates the air in a home and soaks into carpets, furniture, drapes, clothing and even the building materials like drywall and cabinets.

Pets may be considered part of the family but it is still a problem when the animals are not adequately house-broken. Urine isn’t just absorbed by the carpet but also the padding and in some cases, the subflooring. Sometimes, walls and floors have to be treated and sealed before painting and new floor covering can be installed.

If a casual friend doesn’t want to hurt your feelings about the jeans you’re wearing, you can bet the ranch that they won’t tell you about the odors in your home. You’ll need to rely on your closest friends to tell you the truth or maybe your mother-in-law.

Remember to Get Your Annual Credit Report

Mario Gonzalez - Tuesday, January 19, 2016

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You are probably aware that Federal law entitles you to a free copy of your credit report annually by each of the three credit bureaus: TransUnion, Experian, and Equifax. By regularly looking at each of these reports, you can determine if there are any errors on them and be aware of your credit worthiness.

Instead of ordering all three at the same time, experts recommend that you stagger them throughout the year. This will let you look at your credit at three different times during the year instead of only once a year.

An easy way make this happens on a timely basis is to set a recurring appointment on your digital calendar whether it is on your phone, your email program or a contact manager. Make the appointment to order a free credit report from www.AnnualCreditReport.com a recurring event to take place every four months. You’ll order one report from each of three companies once a year.

You can record that date and the bureau you ordered the last report in the appointment’s note section so that you’ll have a history and won’t try to order the same report twice in one year.

This isn’t just for people who are trying to clean-up their credit. This procedure allows you to monitor your credit to be sure that your report is accurate. You might even discover that someone is illegally using your good credit.

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It's Your Advantage

Mario Gonzalez - Tuesday, January 12, 2016

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Technology has certainly streamlined the home buying process and introduced things that help purchasers make better decisions. Buyers have enthusiastically embraced video tours, digital signatures and the enormous amount of information available about a home, neighborhood, schools and neighbors.

The ironic thing is that buyers are ignoring the one single thing that can help them secure the “right” home. Talking to a lender or using a financial calculator is not pre-approval.

Pre-approval requires written verification on employment and income and ordering a credit report for the purpose of obtaining a mortgage. A mortgage credit score is different than what a person might see from credit reporting websites.

Pre-approval gives buyers the confidence to know the amount they can borrow which can result in bargaining power when dealing with a seller or competing against another offer. Transactions can close quicker once a buyer has been pre-approved.

If any issues are discovered in the initial process, the purchaser and lender will have more time to correct them compared to trying to get it done during the loan approval period as stated in the sales contract.

Most lenders best interest rates are only available to the best borrowers. You might get approved on a loan but at a higher rate than you expected which could make a significant difference in the monthly payments.

The “right” home without financing will never have the buyer’s address. Getting pre-approved with a trusted mortgage professional is one of the first steps in the buying process. It can definitely be an advantage that will benefit you in negotiations and ultimately, during the time you own the home.


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