Author Topic: Advice for first time homebuyer, especially re: lending process  (Read 2657 times)

fallstoclimb

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Advice for first time homebuyer, especially re: lending process
« on: January 30, 2013, 07:56:31 AM »
I've read several books on homebuying now but am still somehow confused about a pretty basic issue.  I tried to research this online too but brokers always put in their two cents and I'd rather stay away from a broker, so I thought I'd turn to the most financial-savvy group of people I can think of!

I know we need to get preapproved -- it may take us a long time to find the right house, and I've recently heard anecdotal stories of houses going FAST in this area, so we need to be ready to act.  Is there any reason to 'shop around' for preapprovals, or should we just get preapproved from whoever and then shop around when we have a house in mind and actually know what the loan amount will be?  Is there any pressure to or reason to stay with the preapproval company?

I tried using bankrate and lendingtree to find a lender without much luck, so I've moved on to taking recommendations from friends and our realtor - I've gotten about 6 names using that route.  So - is a decent plan to pick one at random for the preapproval but then ask for quotes from all 6 when we have the mortgage amount?

I'm also open to any other general tips anyone might have for a first time home buyer.  We've educated ourselves to the process but its still a bit overwhelming!  We are, of course, buying well within our means. 

gecko10x

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Re: Advice for first time homebuyer, especially re: lending process
« Reply #1 on: January 30, 2013, 08:01:51 AM »
I'd pick a lender first. Talk to a few & find out what the current rate is on the product you're interested in (30yr fixed, 5/1 ARM, etc.)- keep in mind that the rates will change daily. Find someone that can offer you the product you want at a good rate and is easy to deal with, then get a pre-approval letter from them.

That's my first stab at some quick advice.

James

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Re: Advice for first time homebuyer, especially re: lending process
« Reply #2 on: January 30, 2013, 08:09:56 AM »
I'd pick a lender first. Talk to a few & find out what the current rate is on the product you're interested in (30yr fixed, 5/1 ARM, etc.)- keep in mind that the rates will change daily. Find someone that can offer you the product you want at a good rate and is easy to deal with, then get a pre-approval letter from them.

That's my first stab at some quick advice.

I agree, once you find the house you will have plenty to think about, you don't need the pressure of picking a lender as well.  That doesn't mean you can't double check with the runner up, but I'd want to be happy with the company you are pre-approved with.

Keep reading a lot and asking questions, it does take time to wrap your mind around such a major purchase.  It's good to gather as much info as possible early in the process.

fallstoclimb

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Re: Advice for first time homebuyer, especially re: lending process
« Reply #3 on: January 30, 2013, 08:20:20 AM »
Yeah with rates changing all the time I didn't want to put too much emphasis on that -- but I could contact all 6 lenders now and ask about fees/APR, etc.  Thanks for the input.  Delving into the real estate/mortgage market is very confusing, I can't even compare it to anything else. 

Mrs MM

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Re: Advice for first time homebuyer, especially re: lending process
« Reply #4 on: January 30, 2013, 10:59:56 AM »
Hi!  I'm a realtor, but I'm also Mrs. Money Mustache, so I figured it was okay.  :)

Note that you typically need a "pre-qualification" to make an offer, not a pre-approval.  Maybe this depends on where you live, but here in Colorado, that's how it works.

A pre-qual, as we call it, is pretty easy to get and is based on what you SAY.  A pre-approval requires all kinds of docs.

I would definitely look at multiple lenders for your pre-qualification letter before you make an offer.  Once the offer is in, you won't have time to shop around, as you might be closing in 30 days and just getting approved, getting the appraisal ordered, etc. might take that long. 

So yeah, pick your lender before you even go looking for a house.  Have a pre-qual letter available in advance so you're not shopping for houses out of your price range.  If houses in your area are going fast, you'll need that pre-qual letter anyway to make the offer. 

Try going to your local bank, credit unions, etc. to find a lender.  The lender I use works at a credit union and they have great rates.

I hope that helps!