Having decided to buy a house, it's only natural to consider getting pre-approved with your bank loan officer, but I am here to offer to you, shop around. Even if I was the bank loan officer you came to first, I would tell you to shop around.
There are plenty of lenders to get several quotes on interest rates, fees, and loan programs. Before actually looking for houses, it's wise to start early, consulting many banks and mortgage lenders to inquire about your eligibility for a pre-approved loan and their loan programs.
Some programs like the Fannie Mae HomePath Financing program require you to get pre-qualified before you can put in an offer on a Fannie Mae foreclosed property or HUD home. Learn more about the HomePath Mortgage Program.
Shop Around – Rates, Fees And Programs - Pre Approved
Many homebuyers neglect to do shop around and, after finding a house they'd like to buy, can run into many difficulties. One potential problem I can think of right away is being stuck with an interest rate you don’t like because you back yourself into a corner with the time getting shorter relative to your closing date. You don't want to accept the first loan offer as you may find another lender who will have a better interest rate or less fees. Even a half percent lower rate on a loan of hundreds of thousands of dollars can make quite a difference in savings over the 20 to 30 years duration of the loan.
Getting The Cheapest Mortgage Interest Rate Is Not The Best Strategy
In looking for a house, you want to find the very best mortgage interest rate possible. But is this really the best strategy? What is often overlooked is the very best mortgage program possible for your situation. Getting the best interest rate is such a misplayed psychological sales tactic. And the unfortunate thing is that home buyers fall for it all the time. The very best interest rates during the run up of the market back in 2005 and 2006 was – adjustable rate mortgages that were set to adjust anywhere between 2-5 years.
I can remember having several conversations with my clients to try to talk them out of an ARM because of the uncertainty in the market and they wouldn’t listen. Of course these loans had the best interest rates, but they weren’t the best loans. I have gotten a few calls from some of these clients desperate to refinance their adjusting ARM and guess what – I can’t do a loan for them. They owe more than their home is worth.
The warning here for all new home buyers is that selecting a mortgage is not just about rate. Usually, being a little safer with your mortgage and getting a 30 year fixed rate mortgage is one of the smartest ways to go. Just about any loan officer on the planet can get you this loan, but not every loan officer will offer it if you come to them asking for the best mortgage interest rate. Not every loan officer will offer you the conservative route as they are looking for repeat business with a refinance down the line with you.
Learn About Qualifying For A Mortgage And Loan Programs
When you are starting out with buying a home, make sure you shop around to find a trustworthy loan officer to work with. Learn what you need to know about the loan process and then look for a loan officer who speaks your language about what you know. Then get pre-approved.
Get Pre-Approved – Save Yourself Disappointment And Money
Getting pre-approved gives you an idea of what price house you can afford that will best meet your budget, and you'll save time after finding that perfect house. In case you do not have good credit, if you start with determining your financing options first you’ll have time to correct your credit. Do yourself a favor before you find yourself either getting a loan you shouldn’t, or experience disappointment because you found a house you like but can’t qualify for, get your financing and credit figured out first. Then go house shopping.
After researching mortgage lenders and getting information on interest rate quotes and program requirements needed to qualify for various loans you may find the best rate was the first one you were offered from your own bank. Had you accepted it originally, you might not ever be satisfied that you were offered the best loan interest rate or the right program.
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