You are ready to buy a house, where do you start? Your first step in your home search should be to contact a lender, unless you are a cash buyer. This is extremely important for a number of reasons. They will be the ones to let you know about the current programs, how much money you will need as a down payment, the total money needed to close and the loan amount you can be approved for. They will also provide you with a pre-approval letter or pre-qualification letter, which you will need when submitting an offer on a home. Most sellers will require this letter when presenting an offer, especially if the home is an REO (bank owned) property. Without a pre-qualification letter, we have no idea how much home you can afford. If you look at homes that are above what you qualify for (ex. $180,000), you will be disappointed when you look at the homes that you do qualify for (ex. $150,000). The credit market has changed dramatically recently which can affect how much home you can afford. Most lenders can provide you with a pre-qualification letter within 1 to 2 business days.
It is best to get a pre-approval letter. It usually takes a lender anywhere from 14 to 28 days to get your loan approved through desktop underwriting depending on the type of loan and your current circumstances. If you are pre-approved, this can benefit you in several ways. If a seller has multiple offers on a home, they will most likely select a buyer with a pre-approval over a buyer with a pre-qualification letter. You can also close much quicker with a pre-approval letter. Closing quicker can allow you to schedule the closing for the end of the month and reduce the amount of closing costs.
If you are paying by cash, you will need a source of funds document from your financial institution.
Here are some lenders I trust in the Metro Atlanta area:
Carey Cox with Mortgage South Lenders: 404-886-1556.
Karen Chartier with Flagstar Bank: 770-781-1640
Meryl Dwyer with Suntrust: 678-858-8150
When comparing lenders, they usually have slightly different interest rates and fees. Ask the lender for a good faith estimate and what the APR is. The APR (Annual percentage rate) is the effective interest rate you will be charge per year on the loan. The APR includes the interest rate and all the fees included. Thus, you can effectively compare lenders by APR, not their current interest rate. According to the Regulation Z law, the lender is required to disclose the APR.
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