Most home buyers will need to secure financing when they find the house that they wish to purchase but, recent studies show that most consumers do not shop around for home mortgage financing before choosing their lender. Reality says that in today’s Real Estate Market there are actually more loans, and lenders to choose from than there are available, on the market homes, and although this may come as a shock to many reading this there are reasons for this dating back to the financial crash that took place a few years back.
Consumers should shop around. Home loans are up for the choosing, and consumers should not select the first option of approval that they receive in most cases because, their second or, third approval could save them thousands of dollars, and bring them lower monthly payments as well as low overall interest rates. It may not seem like a big deal at first but, over time that money adds up, and could be better utilized elsewhere, even if it is just kept in savings for a rainy day.
After spending the bulk of my life in the Real Estate field my first advice to consumers who are considering purchasing a home would be to obtain financing prior to beginning their future home browsing. In Metro Atlanta alone you have countless options to choose from but, the correct lender, and even the right Real Estate Agent are going to tell you the same thing – At minimum get a Qualification letter from a Lender so that the Real Estate Agent that you choose knows what your maximum home cost is. Taking it a step further, and obtaining actual approval is even better because, there are no questions centered around pre-approval vs approval for a home loan.
If you put 20% down on your home purchase price the loan will not require PMI (Private Mortgage Insurance) but, most consumers shopping for a home, do not have 20% down therefore, a good lender will tell you that you can purchase your home with as little as 3% down, and 0% down if you are a Veteran. How much does monthly PMI costs increase your monthly mortgage payment you ask? Average increases range between $80.00 and $120 more per month regardless of the area of the United States that you are in.
Finding a qualified, caring, and yet professional lender who will be up front, honest, and dependable is not as difficult as it seems. Ask around, ask friends, ask neighbors, generally speaking ask people that you know for recommendations on mortgage lenders. The first step that you should take though is to contact your local bank as many banks offer discounted Interest Rates for long term consumers who have been banking with them for 6 months or, more. Wells Fargo for example has an excellent program as does Sun Trust. If your credit is good, and you bank with one of those two banks although they have fewer options than mortgage brokers do not discount their offerings. My advice is to get 3 qualifications, and select the best deal from the three that saves you the consumer the most money.
Sofi, a lender based out of San Fransisco labels itself as the first lender to provide pre-qualification with any technology device including smart phones. In speaking with the companies VP of Business Development Dan Macklin he stated that “We believe that we are the only lender able to offer a personalized quote within one minute on any device.” This is obviously geared towards the younger generation but, as Generation Y begins to settle down, and settle into life purchasing homes is a part of the process, and it is a process that Sofi as well as many other lenders are adapting to.
So with all of this said, and hopefully taken into consideration on your end here are the 5 steps to finding, and obtaining the best mortgage deal whether you are in Metro Atlanta or, anywhere else in the country.
- Obtain At Least 3 Quotes – Obtaining at least 3 quotes ensures that you as a consumer are protected. If for some reason financing falls through last minute due to a change that you are not comfortable with you can contact one of the other lenders, and continue on with the process since most rates are good for 60 – 90 days but, only if the full application has been completed which is why I said above to get the full approval status instead of just a Pre-Qualification.
- Check & Double Check The Good Faith Estimate WORKSHEET Prior To Closing – I learned this the hard way unfortunately. I was 21, naive, and very gullible when I bought my first house. As my Realtor and I were discussing yesterday where on earth does almost $30,000 go, and since we are so far past the damage that, that loan created in my life, and she knew it she made the joke “Well, damn that was a lot of closing costs.” and I responded with “Yeah, last we negotiated the Sellers were paying all of the closing costs. Emily must be enjoying life with all of that money she robbed people of over the years.” Don’t just browse over the GFE, get the full worksheet, review it, review it with your Realtor, review it with your Lender, and if there is anything that doesn’t look right, if there is anything remotely questionable bring it to the Lenders attention, and do not be afraid to ask questions. I learned the hard way on this, and because I didn’t know what I know now, and because, I was naive, and I trusted – I got burned badly.
- Get Recommendations And Meet With The Actual Person Who Will Be In Charge Of Your Loan – Had I done this I wouldn’t have had any of the problems that I eventually had. That loan, and the shadiness right from the get go cost me my home, and I had never once missed a mortgage payment (Yes, I promise this is possible). Ask for references, meet with the broker or, lender, ask questions, ask a lot of questions, do your own research to get the same answers first out of that meeting, and if something doesn’t add up then call another brokerage, and ask the same question for a 3rd parties truth. The company isn’t nearly as important as the loan originator. Even the best of companies that promote the highest character can mistakenly hire really bad people who can create hvoc on your life, and turn it upside down without a way for you to fight it or, hopefully not like in my case not even realize what is going on until there is literally nothing you can do except stall the inevitable.
- Know That There Will Be Costs Not Associated With The Loan – Due to the fact that most people only think about the loan they need to be aware and prepared for the fact that there are other costs involved when purchasing a home; Title Insurance, Real Estate Transfer Taxes, Escrow, Earnest Money, Homeowners Insurance, Property Taxes, HOA Fees, Closing Costs, Appraisals, Inspections, and Agent Commissions. Hiring an Agent who will negotiate and or, prepare, and educate you on these subjects is something you don’t want to try and weasel around due to money. An agent will get the commission on the deal no matter what. You might as well contact an agent that will work on your behalf, negotiate for you, and look out for your best interest through the entire process. Otherwise the Sellers Agent will get the commission from you as well as the Seller, and will look out for the Sellers best interest more-so than yours in most cases.
- Obtain A Free Credit Report Before You Even Begin The Process – The importance in this is to rectify any discrepancies, and make sure that you the buyer are in the clear to purchase before contacting a lender to begin getting Pre-Qualifications, and Qualifications. If there are discrepancies on your credit report clear them up. If you have extreme outstanding balances, pay them down as you need to show a small amount of debt to income ratio in order to get the best loan terms, and best interest rates available.
The process for shopping for a home loan seems complex but, it does not have to be that way. Start with your credit report, make sure that you are in the clear, and free of discrepancies, and then begin the search for a qualified, and reputable home loan lender. Get 3 quotes, pre-qualification letters or, full on loan approvals, and then begin your home search with a Realtor that will look out for your best interest throughout the entire process. For more information, and Real Estate tips please feel free to visit my site at http://www.EmBeWrites.Wordpress.com