Financial Secrets: How Much Do You Reveal To Your Broker?
When you make that first visit to a real estate broker, you will be asked, “Have you been to the bank?” or “Have you talked to a mortgage broker?”
It’s amazing how many people respond defensively, “Why are you asking? I have the money!”
Perhaps these prospective clients think the question is too personal and not part of the real estate equation or that the real estate broker is somehow judging their self-esteem.
Quite the opposite. Real estate brokers must ask this question and they need to know the answer for many reasons. Financing is undoubtedly part of the real estate equation and pre-approval is a very important document to have if you are buying a property.
It’s not about whether you can afford it or not. Although that is also very important. It’s about how much the bank is willing to lend you, at what rate, and for what type of building. If you have a secret that may prevent the bank from lending you money, it is best to expose it during a pre-approval process.
The benefits of getting pre-approved
Understanding your financial potential has to be the first step in exploring a new real estate possibility. It is important that you know exactly how much the bank is willing to lend you so that you do not waste your time or the seller’s. Some properties do not allow viewing unless the prospective buyer has prior approval. And if you get to the point of bidding, pre-approval can give you a head start if you’re in a multiple bid situation. In the end, it is faster to get final approval on your mortgage because the bank knows you and has all of your information at hand.
There are also some financial benefits to dealing with banks before you start shopping.
A pre-approval locks you at a particular interest rate for a period of time, very useful if rates go up. And you are not left guessing or reloading with additional funds because you know in advance that the money is there.
Real estate brokers grapple with numbers every day
Your real estate broker fills out a required section in the promise to purchase that addresses the financial side of the deal. This indicates the amount of the down payment you will deposit, the amount of the mortgage, the interest rate, the length of the term, and the length of the repayment.
When the offer has been accepted, your broker calls your bank or mortgage broker so that they can go through all the necessary documentation to obtain the final approval of the mortgage.
In the end, you must accept the fact that real estate brokers are there to take care of you and your money. Don’t be offended when they ask financial questions and reveal what they need. You do not need to share more information than is necessary. Your bank will take care of the rest. Your broker works with numbers on a daily basis and will have your best interests in mind. They want to make the deal as much as you do.