The Home Buying Process: Step 3

Pick Your Lender and Get Pre-Approved For A Loan!!

Pick a lender

Shopping for a lender and a loan is NOT something to start doing after your offer is accepted, when you’re on a tight timeline that contractually MUST be met. Choose someone before you find the home you want to buy – someone not only with competitive rates, but with whom you have a rapport, who is creative and knowledgeable, who does not over promise and under deliver. Again, a recommendation from a trusted friend, colleague or family member is usually the best way to find a good lender or broker. Ask the person recommending about their referral’s communication skills, their timeliness, and their knowledge. A good mortgage broker will help you analyze the particulars of your financial situation and goals and give you options that are specifically suited to you.

The broker will also advise and guide you throughout the process, making sure you know not only what you qualify for and what you need to do to secure the loan, but coordinate the various people involved – from appraisers to underwriters to insurance agents –and keep them on track. As soon as you start viewing homes with the serious intention of buying, interview and select a mortgage broker.

Get prequalified

It has become convention to submit a prequalification letter when presenting or submitting an offer. The prequalification process involves a brief conversation regarding your financial situation including income and assets with your lender, and an assessment of the kind of loan product you would qualify for. On the basis of this examination the lender will provide you with a letter detailing how much you can borrow to buy a home. This prequalification is still subject to verification and credit check.

Prequalification vs preapproval

While having a prequalification letter to submit with your offer is good, a preapproval letter is even better. The pre-approval process generally involves meeting with a lender, filling out an application and authorizing the detailed examination of your current financial situation and credit history. You submit all necessary documentation and get in return a much more sold commitment letter regarding your ability to obtain a loan.

The benefits of pre-qualification and pre-approval include:

You’ll have information about what you can afford and be able to plan accordingly

As a pre-qualified, motivated buyer you’ll be taken more seriously when you make an offer on a home

Lenders can tell you whether you qualify for any special programs that will enable you to afford a better home (particularly if you’re a first-time buyer)

You will have a head start on the time lines once escrow starts which will give you some breathing room and make the process much less stressful.

Real estate financing is available from many sources, and an experienced REALTOR® will be able to suggest lenders with a history of offering excellent mortgage products and services. For more information about the benefits of pre-approval and the loan process in general, give us a call.