GET THE BEST FINANCING
Many potential home buyers start the process by looking at candidate homes. This is not the right way to do it.
Actually looking for a home is one of the last steps in the home buying process.
By following the steps outlined below, you will:
Step 1 – Choose a Mortgage lender carefully
There is a lot of competition in the lending field these days. Checking with your bank is a good place to start. In addtion, we recommend that you consider interviewing a mortgage broker as well.
As with most things, getting a second opinion is useful as it may give you a different perspective on the situation and it could just end up saving you significant amounts of money.
When considering the very large sums that you will be paying out over the life of your mortgage, it just makes sense to make sure that you are getting the best deal possible.
Your bank branch lender must follow the bank’s policies. He or she has very little flexibility in what they can do for you. If you fit in with their credit policies of the moment, you are OK. If you don't fit in, you either forget buying your new home or you have to keep lookiing elsewhere for a lender that accepts your situation.
On the other hand, a mortgage broker deals with many lenders, each of which may have different lending policies, some better suited to your situation. The mortgage broker is skilled at matching the best lender for the borrower's needs and financial situation.
These lenders all know that they are in a competitive situation and will typically offer better rates and terms than they would if they were being sole-sourced by the borrower.
Often, we find that a borrower can obtain better rates from his or her own bank through a mortgage broker than they were able to obtain on their own.
You have nothing to lose by consulting with a mortgage broker. The worst that happens is that you will know for certain that you are getting the best deal possible from your own bank.
However, it is quite possible that you will obtain a competitive quote from different lenders that may work better for you than what your bank offered. It is always nice to have choices.
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Step 2: Get Pre-Approved for a mortgage
People can get confused about the difference between being pre-qualified and pre-approved.
It is far better to be pre-approved.
Being pre-qualified is only a preliminary, informal, non-binding opinion of your creditworthiness, based on incomplete information that is subject to verification before a formal commitment will be issued by the lender.
When pre-approved, you have passed all the credit-based requirements to get a mortgage.
This involves:
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actually submitting your verification documents for full review by the lender,
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getting satisfactory credit checks
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having the lender issue a formal mortgage commitment or approval,
Of course, the property that you wish to purchase must also pass the lender's requirements before the mortgage will be granted.
Because mortgage approval is generally the longest and most difficult subject condition to satisfy in a purchase agreement, it is to your advantage to obtain a preapproval or commitment letter as soon as you're ready to begin your search. In today's markets, it is taking longer and longer for lenders to issue a formal commitment letter, so the earlier that you begin the process, the better.
Get pre-approved before you start shopping for a new home. You have to do it anyway, so why not get it out of the way, especially when you are not under any pressure.
Step 3 – Structure your home search to your price range
Conducting your search within your credit limits presents many benefits:
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You will be in a better negotiating position with the sellers of the house you want to buy. By presenting them with evidence that you are pre-approved, they will know that you are a serious, qualified buyer who will not back out because of financing issues. You will be able to move quickly and to offer the seller an earlier possession, which may be a big advantage if the seller is considering other competing offers.
STRESS REDUCING TIP
Following these steps is one of the best ways to ensure that your home buying process is efficient, effective and enjoyable.
