Many potential home buyers start house hunting without talking to a lender first and this is a mistake. One of the main reasons is that you need a realistic number when it comes to the price of the house you intend to buy. Why waste time or set yourself up for disappointment by falling in love with a house outside your budget? Another good reason for getting pre-approved for a mortgage loan before you begin house hunting is that you will look a lot more appealing and get more assistance from sellers and real estate agents. If they know you already have funding in place, they will bend over backward to help your loan go through.
The Rules of Thumb blog from MoneyThumb discovered this great tool at Nerd Wallet. It is a First Time Home Buyer Guide and includes calculators to help you figure out what type of house you can afford for your area of the US, how much your down payment will likely be, figuring out what your potential mortgage payment will be, help with checking your credit score, advice on collecting financial documents you will need for pre-approval, and calculating your closing costs. If this was the only tool you used before you began house hunting you would be well ahead of the curve.
After using the tool from Nerd Wallet to come up with the financial picture that suits your needs when it comes to finding the right home, your next step before you begin house hunting is talking to lenders. But how do you go about finding the best lender for your financial situation? Below are helpful tips to help you find the best mortgage lender:
- Ask for recommendations--It is a fact that the old fashioned word of mouth advertising is still the most effective. If you have a friend or family member who has recently bought a house and had a great experience with their lender, ask for the name of their lender. Also, real estate agents can offer advice on the best lenders for your particular situation.
- Do online research--Most people in our modern times find answers to every kind of question by going online. Finding the right mortgage lender can be accomplished this way. However, be careful about entering your personal information in online request forms of mortgage lenders. It is a fact that companies sell lists of the contact info of consumers, so don't be surprised when the minute you enter your phone number into the form, your phone starts ringing. You can avoid this problem if you don't want to be inundated with phone calls. Use this advice from The Simple Dollar, "The Federal Trade Commission notes that lenders can and do buy lists of consumers looking for loan information. This is a legal procedure, but one that you can work around. The FTC recommends opting out — you can request that your information not be given to lenders via www.optoutprescreen.com or calling 1-888-5-OPT OUT. You can also visit www.donotcall.gov to be placed on a do-not-call list for five years."
- Look for the best mortgage rate, terms and a lender you like--Ask for a breakdown of all costs and fees — including origination or application fees, appraisal fees, commissions, and more — because comparing mortgages goes beyond just the interest rate. What’s more, you should choose a lender with whom you feel comfortable. There shouldn’t be any pressure associated with your initial meeting, whether it’s in person or on the phone. The lender should be knowledgeable and approachable. If the person you’re talking to is someone you’d feel confident sharing your most personal financial information with, and he or she is quoting you a great rate from an institution you trust, you’ve probably found the right lender.
- Narrow it down--This last piece of advice is also from The Simple Dollar. "Don’t feel like you have to go with the first lender or mortgage broker you contact, even if you had an awesome meeting. Real estate website Zillow recommends finding at least three lenders with whom you feel you could work. Then do more research. Look at reviews online, or ask your real estate agent for their input.In the end, you’re the person working with the lender, so your opinion matters most. Zillow suggests that during your one-on-one conversation with a lending professional, you note the following:
- Did the lender promptly return your phone calls or emails?
- Was the lender friendly and patient, not rushing through the conversation in the hopes of quickly securing another customer?
- Was the lender willing and able to answer your questions in a thorough manner?
- Did the lender discuss the timeline and particulars of the loan, including estimated closing date and costs?
- Do you believe the lender was honest with you about rates and if/when they might change?"
By using the tips we offer in this blog post, The Rules of Thumb blog from MoneyThumb feels very confident that you will have no trouble finding just the right lender before you begin house hunting. We mentioned above getting financial documents in order for pre-approval of your mortgage loan. We offer PDF financial file converters that can help you do that quickly and easily.