When it comes to buying a home, navigating the world of mortgages can often feel confusing and somewhat overwhelming. This is why it's crucial to work with a lender you trust. After all, buying a home is probably the largest financial decision you'll ever make. In order to find the right loan, with the best rate and terms, you’ve got to go into it knowing a few things... because your mortgage will be sticking around for a while...
THERE ARE MANY TYPES OF LOANS AVAILABLE
When shopping for a mortgage, don’t just go with the first one offered by your bank. It’s important to know all of your options in order to choose which best suits your situation and goals. Here are the most common loan types to consider: • Conventional Loan: best for borrowers with good credit scores and low debt-to-income ratio • Jumbo Loan: best for borrowers buying a more expensive home • Government-Backed Loans: These include FHA, VA, and USDA, and these loans are great for borrowers who have lower credit scores and / or minimal cash for a down payment • Adjustable-rate mortgage: ARMS are great if you're not planning to stay in your home for an extended period, prefer lower payments in the short term, or plan on refinancing in the future
YOU CAN (AND SHOULD) SHOP AROUND FOR A LENDER
Just because you’ve been with the same bank for years doesn’t mean they will have the best mortgage product for your specific needs. Don’t be afraid to get multiple quotes from different lenders, banks, and credit unions. Compare interest rates, APR, and lender fees / terms. Did you know? There is a grace period where multiple mortgage applications will only count against your credit score as a single hard inquiry — this is known as the "credit pull window" and is typically a 45-day window in which you can apply with 3-4 lenders to compare their rates and fees without penalty.
THE LOWEST RATE MAY NOT BE THE BEST RATE
Many lenders think you want the lowest interest rate, so they’ll focus on this when putting together an estimate for you. However, It's Important to look at all the other details and terms as well — a lower interest rate doesn’t necessarily mean it’s the best deal overall. Here are some other factors to consider when shopping lenders: • Lender Fees (including points) • Closing Costs – the fees associated with home-buying, including application fees, attorney fees, admin or processing feeds, title company expenses, etc. • Loan Terms (this includes APR) When in doubt, ask your agent to review the estimates from different lenders for you. We see estimates every day and know how to spot the best deal!
A PRE-APPROVAL IS NOT A GUARANTEE
Many buyers assume that once they get pre-approved for a mortgage, they’re locked in and good to go. Unfortunately, that’s not always the case. A pre-approval doesn’t guarantee you a mortgage, and the rate quoted during the pre-approval process may not be the final rate offered. The “pre” is key for context here. A pre-approval is issued before you’ve gone through full underwriting for the loan. If you have a change in employment, your credit score drops because you miss a payment or take out a new loan, some of your financial information turns out to be different than originally reported on the application, or the appraisal comes in low, are all reasons that may affect your ability to get approved for a loan. When choosing a lender, it's important that you go with one that thoroughly checks out your financials before issuing a pre-approval.
If you have questions about the mortgage process, even if you are not quite ready to buy, I'm here to help.