One of the most exciting times for many adults is preparing to buy their first home. Most people need to take out a mortgage loan, which determines how much they'll pay for the property each month. When getting pre-approved for a home loan, there are a few ways to find one that's best for your needs.
Ask Your Real Estate Agent for Referrals
Many people don't think to ask their real estate agent for recommendations on good lenders. Many brokers have their own in-house affiliated mortgage lending business but will not limit their referrals to that lender. Experts also don't recommend going with the lender that your builder recommends if you are buying a new home, even if incentives are included. Instead, you're more likely to get the best deal by asking your agent and getting multiple quotes.
Avoid the Larger Banks
Larger banks and financial institutions may be quick to give you an offer on a home loan, but you'll have a better chance getting a good rate through a smaller bank. Banks often offer fixed-rate conventional mortgages and make it a smoother process. They're often willing to offer more options that benefit you as the borrower with no prepayment penalties or minimal down payment requirements. There are also many point and rate options that are available to ensure that you feel comfortable with the terms of the loans.
Get a Credit Report Before Getting Quotes
It's important to get a free credit report ahead of time before requesting quotes, which will allow you to know where you stand as a borrower and what terms are fair for your standing. This may not put the ball completely in your court, but it can help you to avoid getting drawn into a deal that isn't fair if you're not familiar with your current score.
Request a Good Faith Estimate Worksheet
It's important to ask for a detailed document of a Good Faith Estimate Worksheet, which is required by law. Ask for the complete worksheet, which should include an itemized list of all of the fees and can allow you to compare apples to apples between different lenders.
As a first-time home buyer, it can be confusing finding the right loan that suits your specific needs as a borrower. Fortunately, there are several steps to take to ensure that you find a first time home buyer loan that has fair terms that will benefit you long-term.
About the Author: Lizzie Weakley is a freelance writer from Columbus, Ohio. She went to college at The Ohio State University where she studied communications. In her free time, she enjoys the outdoors and long walks in the park with her 3-year-old husky Snowball. The information in this article is credited to the State Bank of Cross Plains.