One of the elements of buying a home that can have the biggest impact on your budget and bottom line is finding the right lender, and the right loan, for your home. There are a variety of lenders who offer a variety of loan products, so finding the right financial professional can make a huge difference in home affordability — in both the short and long term.
Think about the following as you make decisions about the financial aspects of your home purchase:
Shop around and find the right lender and the right mortgage product
Because they offer a variety of loan products, it’s worth the time it takes to talk to a number of different lenders. I’ll have recommendations, as will your friends and family. Choose at least three and spend some time talking about your particular financial picture to find the right lender and the right loan scenario.
Determine your costs both for the initial purchase and for your monthly budget
You may have taken into consideration the down payment you need, but have you budgeted for closing costs? You may know what your monthly payment will be, but have you budgeted for homeowner’s insurance and taxes? Work with a lender who will help you crunch all of the numbers associated with your home purchase and ongoing costs.
Discuss how your loan will impact your purchasing power
Once you have chosen a loan product that works well for you, have your lender help you evaluate how much home you can afford. You may find that the homes you’re looking at are on the high end of your budget and choose to adjust. Alternatively, you may find that you qualify for more home than you initially thought.
Get pre-approved — not pre-qualified
Pre-approval ensures that your lender is aware of your total financial picture and is ready to help you move through the process to approval of your mortgage. Pre-qualification, on the other hand, is a much more superficial standard. Pre-approval is a much more meaningful designation and can strengthen your offer significantly, especially in the event of a multiple offer situation.
Commit to the right lender when it’s time to make an offer
You don’t want to change your mind about your lender during the escrow process. This can significantly delay closing and may even undermine the terms of the offer itself. Find the right lender ahead of time, so that when it’s time to put in an offer on the right home, you’ll already have the right financial professional on your team.