Lender or Realtor: Who Should You Talk to First Before Buying a House?

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|10 min read

Deciding whether to consult a real estate agent or mortgage lender first when buying a home is a common dilemma for first-time homebuyers. Working with a lender upfront provides clarity on your budget, and getting preapproved shows sellers you’re a serious buyer.

However, connecting early with a knowledgeable real estate agent can offer invaluable guidance for the complex home shopping process. So, which one should you talk to first?

If you are laser-focused on sticking to a budget, maybe a lender first is wise. Do you want an expert by your side to tour homes to see what’s available before you go through the loan application process? Perhaps starting with an agent is best.

Rather than see this as an “either/or” decision, let’s look at it as each professional fulfilling a unique role in the process. In an ideal world, the two work hand-in-hand. A good agent has a trusted network of lenders they’ve worked with for years, so they can make a solid introduction.

From there, you interview options and choose one that fits your specific needs. That way, all the key players are aligned to make your home search as seamless as possible. 

We’ll walk you through the pros and cons of reaching out to a realtor or lender first when buying a home. That way, you can weigh the options and decide the optimal move for your unique situation. 

Should I Find a Realtor or Lender First?

When starting your home search, consulting with a mortgage lender or broker first is generally the right decision. Understanding precisely what you can afford provides a critical foundation for the process ahead.

Get pre-approved first for clarity on your true price range upfront. This prevents wasted time touring and falling in love with homes well outside your budget. Nothing’s more discouraging and sometimes heartbreaking than finding the perfect house only to realize it’s financially out of reach.

Knowing your budget ceiling also sets realistic expectations before you dive into the market. You can focus your search on listings in an affordable range rather than chasing unattainable pipe dreams. Approaching the process in an informed and levelheaded manner saves much heartache down the road.

However, there are benefits to talking to an agent early on, too. The right real estate agent will help you find experienced lenders or mortgage brokers who can help you find the best programs for your situation.

In fact, if you connect with a real estate agent without a pre-approval in hand, they will likely immediately refer you to a trusted mortgage broker to get pre-approved. Most top real estate agents will be hesitant to work with a buyer until they have at least been pre-qualified. Their connections can set you on the path to securing affordable financing.

So, while consulting a lender first provides budget awareness, a knowledgeable agent can also direct you to ideal lending partners from the start. Weigh your priorities, but rest assured, there’s no perfect choice. As long as you end up with the right realtor and lender, the order isn’t critical. However, if you start working with a real estate agent without pre-approval and they don’t directly refer you to a mortgage broker or lender, you should take that as a red flag.

The Role of a Lender in Your Home-Buying Journey

One of the most important steps when buying a home is connecting with mortgage lenders. They play a pivotal role in assessing your financial situation and determining how much you can borrow.

In the simplest terms, a mortgage lender provides financing for real estate transactions–whether to buy, construct, or fix one up. A mortgage lender can be a private company, a public institution, or an individual. But regardless of the entity type, their primary role is to provide loans to finance real estate purchases. These loans typically take the form of mortgages.

There are generally two primary types of mortgage lenders in the United States:

  • Retail lenders such as banks and credit unions. They provide home loans directly to consumers. To fund these mortgages, retail lenders borrow money in the short term from separate warehouse lenders. Once the loan is closed, retail lenders will then package that mortgage together with other real estate loans and sell the bundle on the secondary market.
  • Direct lenders who originate mortgages using their own capital or financing from other sources. Direct lenders sometimes have more adaptable qualification standards in comparison to retail lenders. 

When you apply for a mortgage preapproval, the loan officer reviews your financial situation to determine if you qualify for a home loan and how much you can borrow. This involves assessing factors like your income, existing debts, credit history, down payment amount, and savings.

Based on your financial profile, they’ll tell you the maximum mortgage amount you qualify for, along with the interest rate, mortgage insurance cost, down payments, and loan terms.

A pre-approval letter gives you a clear sense of your price range before you start looking at homes. It prevents you from wasting time touring properties that are financially out of reach.

Once you’ve found a home and have accepted an offer, your mortgage lender will handle all the behind-the-scenes work to approve the mortgage loan and get you to closing. This includes paperwork, underwriting, processing the loan application, and producing the final loan documents.

Having a knowledgeable lender you trust simplifies the home-buying journey. They educate you on the process, explain your options, and ensure you get optimal financing.

Benefits of Consulting a Lender First

When starting your home search, it may be tempting to rush out and see houses right away. But talking to a lender first and getting preapproved for a mortgage will make the process much smoother. Here’s why you should start with a lender:

  • Match Your Budget to Listings
    A lender will look at factors like your income, debts, and credit to determine the maximum mortgage amount you qualify for. This gives you clarity on your price range, so you only browse listings you can realistically afford. Nothing’s more discouraging than touring your dream home just to find out later it’s way over budget.
  • Get Referred to a Trusted Local Agent
    An experienced lender will refer you to trusted agents they’ve worked with in your area. This way, you start off with someone familiar with the neighborhoods you’re looking in and the type of home that fits your needs. No wasting time vetting a sea of unknown agents.
  • Gain a Competitive Edge
    Being preapproved signals to sellers that you’re a serious buyer who’s ready to roll. It shows you have the financing lined up and the ability to move quickly. This can give your offer an advantage in competitive housing markets.
  • Expedite the Home Buying Process
    Taking care of the mortgage application upfront means you can lock in your dream home right away without financing delays down the line. The approvals are handled early, so you’re good to go.
  • Safeguard Your Financial Future
    A lender helps ensure you get the best possible loan terms and interest rates for your situation. And you establish a lasting relationship, so if rates drop later they can connect you with refinancing options.

Make Sure You Shop Lenders

Getting pre-approved for a mortgage loan is an exciting milestone when buying a home. But don’t let that euphoria lead you to accept the first interest rate a local lender offers. Rates can vary quite a bit from one lender to another, so failing to shop around could cost you thousands.

The best way to find the lowest rate is to compare quotes from multiple lenders – this is known as rate shopping. Online mortgage brokers allow you to easily compare rates across different companies. When evaluating, be sure you’re comparing quotes for identical loan types, terms, and mortgage types for an apples-to-apples comparison.

The purpose of gathering multiple rate quotes is to find the lender offering the most favorable terms and lowest interest rate for your specific financial situation. While rate shopping takes effort, it often saves thousands over the loan term, thanks to finding even slightly lower rates.

Remember, after a hard credit check, the impact on your credit score is the same no matter how many lenders you consult as long as the last credit check is within 45 days of the first.

No single lender will have the best rates for every borrower profile. By getting quotes from multiple sources, you increase your odds of identifying the lender with the ideal algorithm and criteria to give you the biggest savings. Don’t leave money on the table and get stuck with the first mortgage rate you’re offered. Shop around with several lenders to maximize savings.

The Role of a Realtor in Your Home-Buying Journey

An experienced real estate agent offers invaluable support for homebuyers by leveraging their expertise. 

On a typical day, a buyer’s agent will:

  • Search the MLS database to pinpoint listings matching your must-haves.
  • Scout potential properties online and in person to find hidden gems.
  • Provide insights on local neighborhoods and market trends to inform your search.
  • Send you listing options tailored to what you’re looking for.
  • Schedule showings so you can preview top contenders first.
  • Ensure you have mortgage pre-approval before house hunting begins.
  • Negotiate the purchase and submit competitive offers on your behalf.
  • Arrange home inspections and handle the legal documents.
  • Guide you through purchase contracts and paperwork.
  • Accompany you to key meetings like inspections, closings, etc.

Experienced realtors also know the best inspectors to thoroughly evaluate a home before closing. They accompany you every step of the way, from showings to closing. With a realtor’s help, you can focus on the joy of finding your dream home rather than getting lost in the details.

Finding the right home involves many moving parts – from mortgage pre-approval to property viewings, negotiations, inspections, and more. A skilled realtor’s expertise in navigating these key stages makes all the difference.

FastExpert connects homebuyers just like you with top local agents rated for their success in guiding clients through every step. Browse thousands of verified realtor profiles from top brands and get connected today.

Benefits of Consulting a Realtor at the Start of the Home Buying Process

Purchasing a home is a huge decision – the stakes feel high, and the process can seem complex. Most homebuyers will only purchase a property a couple of times in their lives. Having an experienced real estate agent guide you from the start helps ensure smooth sailing.

Here are some solid reasons to consult a realtor early on:

  • Gain Insider Knowledge of the Local Area
    Experienced realtors have their fingers on the pulse of home values, neighborhood quirks, school quality, regulations, and more shaping your region. Tapping into their landscape overview helps you make educated choices based on real market information.
  • Get Tailored Home Recommendations You’ll Love
    With so many listings out there, sifting and sorting can be daunting. But your realtor will get to know your wish list and preferences before recommending options that truly match your needs and budget. You’ll get customized picks without wasting time on irrelevant properties.
  • Gain Access to “Insider” Listings
    Well-connected realtors often catch wind of listings before they officially hit the market. Starting early means you could get exclusive early access to hidden gem properties.
  • Help Accessing Financing
    Realtors can assist with getting pre-approved so your offers stand out as truly financed and competitive.
  • Get Unbiased Guidance
    Realtors give impartial advice to help you objectively weigh the pros and cons throughout the home-buying journey.

Good Agents Know Good Lenders

While speaking to a lender first is prudent to determine your financing options, it also can’t hurt to get the perspective of a real estate agent first. Experienced real estate agents cultivate relationships with an array of mortgage brokers and lenders who facilitate smooth transactions, including top-notch lenders.

Experienced realtors have worked closing after closing, so they know which lenders bring efficiency, competitive rates, and stellar service to the table. They’ve seen behind the scenes to vet which lending partners operate with integrity.

Trusted realtors can shortcut the guesswork by connecting clients to proven lenders they rely on regularly. These lender referrals have typically financed many previous clients satisfactorily.

Working with a lender recommended by your real estate agent provides continuity. The realtor and lender have likely collaborated to bring many mutual buyers from loan approval through closing. This streamlines the process.

While still doing your due diligence, give weight to lender referrals from realtors. Their insider perspective provides a credible endorsement of financing partners to consider. Leverage your realtor’s network for a lending experience as smooth as the home-buying journey.

Conclusion

Determining whether to consult a lender or realtor first depends on your personal timeline and priorities. Getting pre-approved early by a lender gives you price clarity. And remember, just because you get pre-approved by one lender does not mean you are required to work with them to complete your purchase. However, good realtors also have relationships with reputable lenders to refer you to.

If you are still developing your buying strategy, an initial realtor consultation may provide beneficial housing market insights that inform how to approach financing. But those questioning their purchase capacity or further along in their search should discuss pre-approval first with a lender. Over time, you’ll eventually partner closely with both a trustworthy lender and realtor to land your dream home.

Fast Expert connects buyers to top-rated real estate agents and mortgage professionals.  Leverage this support for a smooth home buying experience from start to finish.

Get started and find your ideal realtor match today with FastExpert.

Kelsey Heath

Kelsey Heath is a real estate content specialist with an extensive background in residential, industrial, and commercial property. She has been involved in the industry for a decade as a professional and personal investor, gaining a deep understanding of the market and trends. With a passion for written communication, Kelsey loves helping people understand the sometimes-complicated concepts behind real estate and is now a sought-out guest and ghostwriter.

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