Money Moves with G: Get Pre-Qualified Before You Shop

Key Takeaways

• This week's Money Move: talk to a lender before you start touring houses, not after
• A pre-qualification looks at income, job history and credit, but most of all your monthly debts, not just how much you make in a year
• Rachel Brantingham backs him up: a licensed agent's fiduciary duty is to never show a house until a buyer is qualified
• It is never too early to call. Grafton fields calls from buyers who are a year or more out
• Next week's topic: the difference between a pre-qualification and a pre-approval

Summary

Grafton Sizemore opened Money Moves with G the way he opens it every week, with his disclaimer, then moved straight into this week's topic: the very first step before anyone ever tours a house, pre-qualification, and why so many first-time buyers skip it.

Rachel Brantingham's housing update had just made the case that buyers are still out there making decisions. Grafton's segment picked up exactly where that left off, explaining what a buyer should do before shopping even starts.

Full Article

Grafton Sizemore opened his segment the way he opens every week, with his disclaimer.

"Full disclosure, my NMLS number is 2068414. I'm a licensed loan officer with Motto Mortgage. Anything I say on here is just that, opinions. I'm not a licensed CPA. I'm not a licensed financial advisor. Any of the money moves we talk about that are not related to mortgages are just opinions. My license just covers when I talk about mortgages, rates, and so on," he said.

From there he moved into this week's real subject: pre-qualification, the step he says most first-time buyers skip entirely.

"One of the biggest things we do in lending is pre-qualifications. And people don't really understand when they're buying for the first time the real process," he said. Most buyers start online, browsing listings on Zillow, Realtor.com or a local brokerage site, then call an agent to go look.

Grafton turned to Rachel on air to make his point. "When you go show someone a house, Rachel, you want somebody to be pre-qualified before you show it to them," he said.

"100%," Rachel answered. "In fact, it's a licensed agent's fiduciary duty to never open a door until they are sure that their client is qualified." She added that it protects buyers from falling for a home they cannot afford, and it respects sellers, who want to know they are showing to someone who can actually buy.

What a Pre-Qualification Actually Looks At

Grafton walked through what goes into it. A lender reviews two years of job history and income, checks credit, and above all looks at monthly debts.

"What we're really looking for when we pull credit is, what are your monthly debts?" he said. "So if we have all of those pieces, we can tell how much you're bringing in per month, how much you're spending per month, and how much we have left per month for a monthly house payment." He said people often think in terms of yearly income or total debt, but lenders work month to month.

The last piece is how much cash a buyer has on hand, which shapes the down payment and which loan programs make sense. Grafton said he prefers taking a pre-qualification over the phone rather than through an online form, because a conversation gives him a full picture an online form can't.

The Money Move

"Talk to a lender before you start looking for houses," Grafton said. "You'll save yourself time. You'll save your realtor time. And you'll save yourself a lot of heartache looking at something that you just might not be ready for or able to afford."

And if the answer is not yet, he said, that is not a rejection. "If you're working with a good lender, they will give you the steps to get to where you need to get," whether that means paying down debt or adding a co-borrower.

Rachel picked up the point as the segment wrapped, encouraging listeners not to wait even if a purchase is years away. She said it is smart to loop in a lender early, whether someone is one year out or five, and that asking whether a caller has already talked to a lender is the first question she asks any client who wants to go look at houses.

Grafton closed with a preview: next week's topic is the difference between a pre-qualification and a full pre-approval, and why the version buyers often get online in a few minutes isn't quite the same as either one.

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