You’ve calculated the basics of your credit, income and savings on your own.  Now it’s time to meet with a lender to learn about your options and create a plan of action!

For some, this is the most intimidating part of the process.  You’re about to share private financial details with a practical stranger.  You’re about to take the first step in making the months of mental planning a reality.  Are you really ready?  The fact is that if you have gotten to this point in the process on your own, you are ready to at least have a preliminary conversation with a lender.

There are many concerns associated with meeting with a lender, below are some of the most common:

Concern #1: I’m not ready to buy a house just yet, so a lender won’t want to meet with me.

Reality #1: Lenders do much more than just issue loans.  They offer services for credit counseling, savings plans and more.  Buying a home involves many more financial aspects than just the loan itself, and a lender’s true purpose is to guide you through all of those aspects.  

Concern #2: I will have to provide all of my financial information and/or apply for a loan that day. 

Reality #2: As mentioned above, lenders provide many other services other than loans and therefore do not expect you to apply for a loan simply because you are scheduling a meeting.  Once you are ready to move forward with the loan process, you won’t be expected to provide anything more than your salary, assets and credit score until you have a contract on a home.

Concern #3: Meeting with a lender will cost me money or require me to commit to them.

Reality #3: There is no cost or commitment associated with meeting a lender. In fact, you can (and should) meet with and even get pre-qualified with multiple lenders at no cost before selecting the one who you will work with.

Concern #4: The lender will judge me or be critical of how much money I make or my credit score.

Reality #4: Lenders work with all ranges of incomes and credit scores every day.  They have seen it all and it is their job to help, not criticize.  If you have taken care of the first three steps of confirming your credit, income and savings on your own, you will be in a better position than most by the time you meet with a lender.

Concern #5: The lender will tell me something worse that I was expecting.

Reality #5: As with Reality #4, if you have prepared on your own beforehand, you shouldn’t receive any shocking news from the lender.  If bad news does come out of the woodwork, meeting with a lender far enough in advance will give you time to work through the issue before it’s time to purchase.

Concern #6: If my loan application is rejected, it will go on my credit report or I won’t be able to apply for a loan again in time.

Reality #6: You credit score is never affected by a rejected application.  If your application is not approved for some reason, your lender will work with you to remedy the situation, and you can re-apply for a loan as soon as you feel comfortable.

A typical preliminary meeting with a lender will involve discussing the different loan types available and discussing your finances in very general terms.  If you choose to move forward with the loan process, your lender can provide you with a pre-qualification letter, which gives you a price range based on your verbal statement of income, assets and credit.  Once you are ready to begin your home search, your lender will provide you with a pre-approval letter,which takes a closer look at your finances, credit score and current interest rate to give you a more specific price range for a specific loan program.

The bottom line is that knowledge is power!  If your goal is to one day purchase a home, you have to know what you can afford.  Don’t wait until you’re in the midst of your home search and in a time crunch, get educated now so you can be in the best position possible when it does come time to buy.

Posted on February 13, 2014 at 4:00 pm by Palmer Harned

This content is not the product of the National Association of REALTORS®, and may not reflect NAR's viewpoint or position on these topics and NAR does not verify the accuracy of the content.