What to Know about Navigating the Homebuying Process

6/14/2023 12:00:00 PM

Personal Insights Financial Education June 2023_10 Mortgage

 Taking out a mortgage can seem overwhelming whether you’re a first-time homebuyer or have done it before. The mortgage process can be stressful. But with the right guidance, understanding interest rates, mortgage points and loan programs can be easy.

We’re here to tell you what you need to know when looking for a home loan.

1. What should I do first when buying a home?

To start the homebuying process, the best place to begin is with a mortgage lender (also known as a mortgage banker or loan officer). Many people make the mistake of finding a lender after finding their dream home and about to make an offer.

The truth is many realtors (or real estate agents) won’t even show you a home until you have a pre-approval letter from a lender and most listing agents won’t even entertain an offer without a pre-approval. Additionally, it makes the initial house search easier when you know how much home you can afford.

A mortgage lender will help you meet your homebuying goals by reviewing your credit, down payment options and loan programs available. Meet a mortgage lender for a free pre-approval before shopping for a home. This shows others you are a serious buyer. They will know what you can afford.

Real estate agents, builders, and sellers will respect this. This also ensures you won’t miss out on being a contender for a home if you happen to see one you love and want to make an offer right away.

2. How Do I Choose a Mortgage Lender?

Your home is often the biggest purchase you’ll ever make, so when it comes to choosing the person who will help you with that loan, pick someone you can trust. It might seem easier – or more convenient – to shop for your mortgage online, but that’s a common misconception.

In addition to being easier and more convenient – having someone you trust walk you through the process – there are 3 big advantages to working with a local, reputable lender:

  1. Local lenders know the market. Not only do they regularly work with local title companies and agents, they’ve also likely driven through the neighborhoods, walked the nearby parks and shopped at the local stores.
  2. You can meet with local lenders face to face. A mortgage can be complicated. It’s easy for misunderstandings to happen via email or phone. But when you can meet with a lender face to face, you can clear up a lot of that potential confusion.
  3. Local lenders are available if something goes wrong. If there’s an issue with your appraisal or closing, a local lender who has formed a relationship with you and understands your situation is more likely to be able to help you than a call center that may or may not be open.

There’s something to be said for working with a lender who cares about you – not just your loan – and who will walk you through the mortgage process, providing unequaled personal service along the way. After all, you shop for shoes online – not your mortgage!

3. How Do I Get Pre-Approved?

The first step to ultimately getting the keys to your new home is getting pre-approved for your mortgage. You’ll need to gather your financial documents and apply online or schedule an in-person appointment. Your lender will follow up with a phone call or email as soon as possible.

Learn more on how to get pre-approved for your mortgage.

4. How Much Home Can I Afford?

A mortgage does not necessarily cost more than paying rent. When interest rates are low, mortgage payments become more affordable.

Our loan payment calculator can help you figure out how much your loan payment might be.

Once you have an idea of how much home you can afford, make a list of the things that are important to you in a home. Deciding what type of home you are looking for, location and space requirements will help you stay focused when you start your search. Keeping a list of wants vs. needs will also help you narrow down home options in your price range.

5. How Do I Get the Best Mortgage Rate?

With so many factors determining a mortgage interest rate, it can be confusing to understand whether you’re getting the best possible rate. No matter what current interest rates look like, make sure you do your homework before sealing the deal. Here are 4 things to know about mortgage rates before committing to a mortgage loan. 

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