The first step in buying a home is arranging to pay for it. For those that are financing their new home, this is a critical step and should be addressed before you start looking. This is true for a number of reasons including:
Knowing how much you can afford: The mortgage company will determine how much you can afford at the current rates taking into consideration your debt and income.
Giving you negotiating power: This often overlooked psychological negotiating tactic can help you get a better price or become the offer of choice in a multiple offer situation. A truly pre-approved buyer is almost as good as a cash buyer.
Pre-approval vs. Pre-qualification: These terms are often used interchangeably but they are VERY different. Pre-approval means a qualified lender AND underwriter have reviewed all you financial information, verified it and have FORMALLY approved you to get a loan up to a certain amount. All you need to finalize the loan is a sale contract for a house that you can afford and the only contingency is that is appraises for at least the purchase price.
Find a lender you trust: Be choosey when selecting a lender. Some will tell you anything you want to hear to get your application and make promises they can not deliver on. They will keep saying everything is great and not to worry and then days before closing call to say you loan is approved conditionally and you need for example, more money down or have to take a higher rate. At that point you are stuck and end up taking whatever they will give you.
While you can choose any lender you want, there are advantages to working with one of our regular lenders. We are not officially endorsing any lender listed but will say that they have all proven themselves with my clients and I have been involved with them is past transactions. Here are some of the reasons working with a familiar lender may be advantageous.
Volume: We do a lot of business with these lenders. Thus when you choose to work with our regular lenders, you have immediate leverage. When you go to another lender, you are viewed as a single transaction, with ours you are one of many.
Fast and Efficient: Because of the number of transactions we have done together our lenders know how we work. The level of trust we have earned means what they say will happen usually does.
Mortgage Nightmares: Many of the difficulties experienced purchasing a home comes from clients that work with other lenders that they know only from the promises that were made to them. Most money for residential lending comes from the same sources with the same requirements. If a lender tells you they can do something my regular lenders can not, run don’t walk out of their office. The variance of rates and fees industry wide is very small but the difference in service is tremendous!