You've decided you want to buy a home. You've probably been looking at homes on many websites, trying to get an idea of what is available and what you like. You may be looking for a real estate professional or have already decided to use the REALTOR® your best friend referred you to. You feel like you are ready to go pick out the home of your dreams.
Question... before you go to the grocery store, do you have a list as well as a budget? How about when you have went to purchase a car? Prior to pulling on the lot and finding the shiniest, sportiest model, did you have a number in mind for what you could spend? Maybe you focused on how much you could afford the payment to be each month, instead of the overall price. Most of us do not have unlimited funds and therefore have a budget of some sort. Definitely before you head out to find your dream home, you need to determine what is your buying power, or budget. You don't want to fall in love with a home only to find out that you will not be able to secure a loan for a home of that price.
So now you need to find a lender. You could use a direct lender, such as your personal bank, a mortgage lender that specializes in mortgages as their only product, or a mortgage broker that shops for the best mortgage product to suit your needs (for a fee of course). No matter the type of lender you choose, you need to shop around for rates, fees and for a lender that you feel comfortable with. Asking your inner circle or your real estate professional for referrals is a good place to start. Then take the top two or three, meet with them, and ask questions.
When you meet with lenders, be sure that they explain the different types of mortgage loans, and what they offer. Do they offer only conventional loans or also government-insured loans, such as VA, FHA or USDA? What is required for each and which is best for you in your current situation? Ask them to explain discount points, origination fees, interest rates and annual percentage rates (APR) as well as other costs associated with a mortgage, such as appraisals, taxes, lender’s title policy, recording fees, pest inspection reports that may be required, as well as escrow accounts if applicable. They should be able to tell you the average time from loan application until they typically can close the loan. Find out how often they will update you on the progress of your loan application and what method they prefer to communicate. Will you have one point of contact throughout the process?
Your conversation should not only be informative but also comfortable. You will be working with this lender for a while, and sharing your personal financial information. The right lender for you isn’t necessarily the one that can process your loan the fastest. The right lender is often the one that treats you as a valued and respected part of the process!
Once you have found the lender of your choice, ask them for a pre-approval. Pre-approval in hand... now you know your price range and are ready to look for that dream home.
Image courtesy of Stuart Miles at FreeDigitalPhotos.net
Comments(3)