There are a lot of things that I really feel dumb about, and these beginning stages of trying to buy a house is definitely one of them. The whole pre-approval process is confusing and I don’t know where to begin.
From the preliminary research I’ve already done it seems like all the different lenders (Rocket Mortgage, Banks, etc.) all require the same information…so how do I find out who will give me the highest amount with the best rates? Do I just randomly pick one and go with it? That very much seems like the wrong answer. Is there a website or program that I can input my information and I get a handful of offers to shop from?
Sorry for my ignorance here, but online resources seem to give a lot of information about the process, with no real help on helping me get there.
Try a local mortgage broker or two. Nationwide advertisers like Rocket Mortgage are more expensive, in my experience. I base that on my experience with LendingTree 20 years ago.
You might want to start with your Bank or Credit Union. Often a great place to start.
You can also check with your Realtor, usually they like to have a broker or 2 that are easy to work with.
Pretty much yes; pick one and go with it. BUT! You don’t have to commit before they’ve told you the terms, so shop around. You can set two or three on the task and pick the best one. Make sure to ask about fees, because those can differ and make one deal sound better than another if they’re not spelled out.
I’d second getting some local quotes. Maybe see what three or so local places will offer you.
One consideration that came up for us is that some lenders have poor reputations amongst sellers, in particular regarding how competent they are about closing in a timely manner. We’ve been specifically advised by multiple sellers agents and for-sale-by-owner sellers that they’d prefer not to see Wells Fargo because they have a reputation for delaying or screwing up the closing.
Also, who you get pre-approved by isn’t necessarily who you have to end up using. In one of those cases we were pre-approved by Wells Fargo because that’s our bank, but we made our offer while promising to use someone else for the actual financing.
For the most part for a financing the important criteria are competence of closing and the rates and costs. Competence of closing is very important in a hot market where losing the deal could be contingent on your lender’s reputation. Perhaps it’s less important in a saner market. For a refinance rates and cost were the only factor for me. I don’t put much stock into “customer service” otherwise, at least in terms of servicing your loan once it’s closed. There’s a pretty good chance the servicing will be bounced around to other companies anyway, so it doesn’t really matter. At least, that’s always happened to us at least once per mortgage.
You can ask any lender or bank what their rates are. They have a large range of rates depending on several factors: the amount of the loan, the percentage of purchase price, the length of the loan, whether it is to be a fixed or variable rate, and of course your credit rating. If you get a chart, you can compare the various options and choose what works best for you.
As far as how to get a pre-approval letter, the lender will require you to go thru the application process at least half way. Based on your financial situation, they will tell you how much they are willing to loan you and on what terms.
As a Realtor, I advise you to begin this process once you are serious about buying property. Get your pre-approval before shopping or looking at homes. That way, you won’t look at ones that you can’t buy, and any offer you make will be significantly enhanced by a pre-approval.
In today’s hot home market, at least in my area, sellers are getting multiple offers. Anything you can do to make your offer stand out makes it more likely to be accepted. Cash offers are best, but pre-approval offers are almost as good.
That’s the problem we run into down here. I went to an open house on Sunday for S&Gs and was told when I walked in the door that they already had 7 offers on the home and I should get my offer before 3 to be considered. It was 1. The open house started at 12.
Thanks for the advice everyone. I think we’re going to do some research about local lenders and start there.
It’s entirely possible that the open house you attended had been on the market for some time already, and those offers may have come in even before the open house date. It takes time to arrange an open house and there is a lead time for advertising, so a broker isn’t likely to cancel one that was already set up. Even if the property has an accepted offer, a broker can gather future clients thru an open house. It’s a social networking thing.
The moral of the story is…don’t wait for an open house if you see a property you like. Arrange for a showing for yourself earlier and beat the crowd.
BUT! You don’t have to commit before they’ve told you the terms, so shop around. You can set two or three on the task and pick the best one. Make sure to ask about fees, because those can differ and make one deal sound better than another if they’re not spelled out.