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Lesson 4.1

Where to Start: Lender or Real Estate Agent?

Tim Alvis | Credit Expert | NMLS #373984

Who’s Your First Contact?

This chicken-or-egg question is among the most common for first-time homebuyers. There’s no right or wrong answer. You can start the home purchase process by contacting either a lender or a real estate agent.

But one of the first things a real estate agent will ask you is: Have you been preapproved for a mortgage?

  • Prequalification may be easier than you think

Starting with a Lender

Loan prequalification and preapproval are incredibly important steps that give homebuyers a clear sense of their purchasing power and what they can realistically afford. Loan preapproval shows real estate agents and home sellers that you’re a serious buyer who can make a strong offer.

In fact, some real estate agents and home sellers won’t accept a purchase offer without a copy of your preapproval letter.

Here are three big reasons why it often makes more sense to start the homebuying journey with a mortgage lender:

  • You’ll know if you’re a good candidate. By starting with a lender, you’ll get a good sense of whether you can actually secure a mortgage, how much of a loan you can obtain and how much your monthly payment will be. Sellers and their real estate agents want to see strong homebuying candidates who are likely to make good on their offer and get to closing day. Being preapproved gives you a clear sense of what’s possible and shows sellers you’re a serious contender.
  • You’ll know what you can afford. Talking to a lender first can help you avoid a big emotional letdown. The last thing you want to do is spend time looking at houses you can't actually afford. It’s heartbreaking to fall in love with a $300,000 home and later find out you can only qualify for $200,000. Avoid that pain by knowing in advance what price tag you can afford. Getting preapproved allows you to shop for homes under realistic budget constraints.
  • A VA lender can help you find a military-friendly agent. Real estate agents who aren’t familiar with the details of the VA loan program could waste time showing you properties that have little chance of meeting VA and lender guidelines. Lenders can try and help connect you to a military-friendly real estate agent in the community. That can be especially helpful for service members who are PCSing to an unfamiliar duty station. We’ll talk much more about working with real estate agents in our “Starting the House Hunt” course.

Again, it’s absolutely fine to start this journey with an agent. Regardless of where you begin, you’re going to be working toward the same goal: Getting preapproved for a home loan.

Real estate agents will also likely look to connect you with lenders and loan officers they’ve worked with in the past. Just be sure you’re talking with lenders and loan officers who truly understand VA home loans – that helps ensure you can fully evaluate all of your mortgage options before choosing a loan product that makes the most sense for you.