Pre-Approval and 3 Rules to Remember When Shopping for a Mortgage

Pre-Approval and 3 Rules to Remember When Shopping for a Mortgage

Why pre-approved buyers are ahead in the home buying game:

If you make an offer on a home and then apply for a loan, you are at the lender’s mercy, who is aware that you do not have time to shop around.

Pre-approval saves time spent looking at houses you can’t afford.

A pre-approval letter from a lender gives you an edge when multiple offers have been made on a house.

Pre-approved buyers can generally close escrow more quickly, since most of the work has already been done.

Here are 3 critical shopping tips for anyone looking for a new loan:

All the terms of a loan matter.

Know the Terms
Unfortunately, shopping for a mortgage is not as simple as finding out how much a lender will let you borrow and at what interest rate. You’ll want to get a complete breakdown of what any offer your receive means to you on a monthly basis as well as how much money you’ll be spending over the life of the loan.

Not All Mortgages are the Same
There are several mortgage types available to residential home buyers. Most people will shop for a traditional fixed rate mortgage, but other options are available including adjustable rate loans (ARMs), Federal Housing Administration loans (FHAs), and Veteran’s Administration (VA) loans. You’ll want to be sure to understand what kind of loan a lender is offering you.

Fees, Fees, Fees
Most loans have fees associated with them in additional to the principal amount borrowed to buy the home. You can sometimes borrow the money need to cover these fees, but that will obviously increase the overall amount of debt you undertake. Some fees are paid up front, and others are not due until closing.

Contact our team to learn about how to shop for a mortgage and what other questions you can ask lenders to find the best deal. We’re happy to get you started on the right path so we can start looking for your new home!

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