Before you spend any time and energy previewing homes, you should have a lender’s opinion of your buying power. Nothing is more disheartening than to find “the perfect home” only to realize that you cannot afford to purchase it. In today’s real estate market it is essential that a buyer is pre-approved for a loan prior to beginning a serious home search.  Lenders have stricter requirements now and require proof of your income and funds in the bank. Credit scores also make a big difference in the interest rate and fees you will pay for a loan. Meeting with a lender and getting a pre-approval for a loan will answer many questions for you, such as:

• What price range do you qualify for? 
• What kind of monthly payment (including homeowner insurance and property taxes) are you comfortable paying?  Keep in mind that your lender may qualify you to purchase a home that is more expensive than you want to buy.  It’s important that you know what monthly payments you’re comfortable paying. That will determine what your maximum purchase price will be along with the amount of your down payment.
• What kind of loan program suits your needs?  Examine the different financial options open to you. There are numerous Fixed and Adjustable rate (ARMS) mortgage plans.  When you meet with your lender you’ll learn about the various programs and select one that best suits you.  You will not need to select or “lock” into a particular loan until you are under contract to purchase a home, but now is the time to learn about the various programs so that when the time comes to make the decision you can.

We cannot stress how important the pre-approval process is.  Without a pre-approval in place you cannot seriously look for a home nor can you make an offer that will be seriously considered by a seller. A seller is unlikely to consider your offer to purchase without a letter from a lender telling them you can borrow the money.

 
How many lenders should you talk to or meet with?  This is an individual decision.  Some buyers like to meet with 2 or 3 while others only meet with one.  In today’s competitive mortgage market, you’ll find that many lenders have similar fees and programs.  We suggest you work with a lender that we are familiar with and that we know can get the job done.  Your loan is probably one of the most important pieces of this home buying puzzle. You want to make sure you have a lender who is accessible to you, has excellent customer service and who, in the end, will come through for you.  Working with a “virtual” Internet company can be risky and we suggest you do not use one.

You can talk with lenders on the phone to determine whom you would like to meet with.  To get preapproved for a loan the lender will give you a list of several documents they will require (such as bank and pay statements). Once the lender has the required documents, you should be able to get a preapproval within a few hours or at the most 4 days. Once you have met with a lender(s), you’ll be given a “Good Faith Estimate” (GFE). This statement will outline your loan program and fees. The Good Faith Estimate will give you a good idea of how much money will be required at closing and you’ll see a breakdown of the costs.   Keep in mind if you meet with more than one lender, you can compare each of the Good Faith Estimate to see what the lenders are charging.  Generally lenders are happy to review their Good Faith Estimate against another lender’s with you so you will understand how they compare. Keep this estimate until closing so that you can compare the numbers.  They won’t be exactly the same, but it will allow you to see if any unusual fees have been added at the last minute.