Going house shopping for the first time is an exciting moment in life. The process of searching for your perfect home can be both fun and stressful at times.
The type of mortgage loan you choose can influence how difficult or easy it will be to buy your first house.
Here are five reasons you should explore mortgage lending options before house shopping.
1. Determine What Size Loan You Can Afford
Finding out how big of a loan you can qualify for is a great first step to take before purchasing a home.
Lenders can prequalify homebuyers for loans after making a quick assessment of their finances.
Since lenders base pre-qualification on a potential homebuyer’s self-reported income and finances, it is not as definite as a pre-approval. However, pre-qualification can give you a good idea of what estimated loan size you may be able to qualify for later on.
It takes no more than a few days on average to receive a pre-qualification letter. Once you have it, you can better estimate what size loan you will be able to get in the future.
2. Find Out Which Loans Are A Fit
When it comes to purchasing real estate, buyers have many loan options to explore today. Several different mortgage loans suit homebuyers of varying backgrounds and occupations.
Government-backed mortgages make the dream of owning a home accessible to low-income homebuyers. For instance, VA (Veterans Affairs) loans enable military veterans and serving members to purchase homes without a down payment.
On the flip side, buyers looking to purchase expensive properties may benefit from jumbo loans.
Loans may also be variable or fixed. Homebuyers who need time to pay their loans off may prefer fixed-rate loans, while borrowers with a lot of savings may choose a variable-rate mortgage to enjoy the low initial rates.
3. Discover The Best Mortgage Lending Options
If you are diving straight into your homebuying journey, you might feel pressured to choose a lender fast when you find a good house.
However, it’s prudent to take your time to research and talk to each bank or lender to understand available mortgage lending options. Just because some lenders may approve you for a loan doesn’t mean that they are the best choices. With proper investigation before shopping for homes, you can discover the loan option that provides you with the lowest rates and the most reasonable amount of time to pay off your mortgage.
Since mortgage brokers work with a variety of lenders, they can help home buyers find better rates than many banks and individual lenders.
4. Ask The Right Questions In Advance
When approaching a lender to talk about loan choices, it’s a good idea to come prepared with the right questions.
Many of the mistakes that buyers make when choosing a mortgage are avoidable with the right amount of consideration. When you discuss the types of loans and rates with a lender, they can help you arrive at a decision more quickly.
Make sure that you fully understand the downpayment percentage, interest rates, and all associated fees so that you do not run into surprise expenses down the road.
The better your lender understands your financial situation, the more personalized advice and assistance they can provide you.
5. Prove Yourself With Pre-Approval
Without enough assurances that you can afford a house, a seller may refuse your offer just before closing. Having a deal fall through on a home you wanted can be very frustrating.
Fortunately, getting pre-approved for a loan can prevent this issue entirely. Pre-approval will put sellers’ minds at ease, as it is evidence that potential buyers can afford their houses.
Pre-qualification and pre-approval might seem like the same thing at first. Even more confusing, some people use the two terms interchangeably.
There is, however, a key difference. Pre-qualification is a quick, surface-level examination of your finances, while pre-approval requires more solid proof in the form of your debt-to-income ratio, pay stubs, and a hard credit check.
Making sure you know the best mortgage lending options available will help you succeed in your home shopping endeavors.
To make your home purchase as seamless as possible, discussing your options with a reputable mortgage broker beforehand is best. By the time you do close on your dream home, you will already have a solid mortgage plan in place.
For more than two decades, Supreme Lending has helped people from all walks of life fulfill their dream of buying a home. Find out more about the loan programs we offer now.