Editor's note: This is the fourth in a series of articles put together by the Park Rapids H.O.M.E. (Home Ownership Made Easy) group outlining the steps in buying a home. The articles will appear in the Park Rapids Enterprise over the next several weeks.
Over the past two weeks we have begun to navigate the "steps" to homeownership. This week the topic is choosing a qualified lending professional in order to help you get the mortgage product that is the best fit for you.
Choosing a qualified lending professional is a critical step in the process. Your lender is your partner in finding the perfect loan to meet your needs. Each loan is a puzzle; lenders start with the individual pieces and eventually fit them together to create a loan to help finance your dream.
When shopping for a lender, don't be afraid to look around, meet with a few people, and ask questions. The lender is working for you and can be a very valuable resource during the home buying process. Your lender should be willing to talk to you and to answer any questions you may have regarding the financing process. Your lender should also provide (upon request before you apply, or automatically - within 3 days - after receiving your application) a good faith estimate of closing costs.
This estimate will show you a breakdown of what charges and fees you can expect to pay in conjunction with your loan. The good faith estimate also serves as an effective tool when comparison shopping between lenders; however, slightly varying closing costs are very common and shouldn't be the only basis for your decision. Often times if you simply talk to the lender about the difference in costs he/she can explain to you where it comes in. One of the most important things you should keep in mind is that you will be working with this person to purchase what is (for most people) the most expensive thing you will own in your lifetime. Make certain you feel comfortable with the lender you've chosen.
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After you've chosen one or more lenders that you feel comfortable with you should ask them to do a "pre-approval." A "pre-approval" is essential in that it provides you an idea of how expensive a home you can afford, what programs you qualify for, how much down payment money will be required and payment parameters. The lender will look at your income, assets and liabilities to get a better picture of your financial situation. Upon approval, your lender can issue a "pre-approval" letter to let real estate agents know that you have been to the bank and are "pre-approved." Obtaining a "pre-approval" before shopping for a home is beneficial because knowing exactly what price range to shop in will help you fall in love with your perfect home, in your price range, with your ideal payment.
At times the home buying process may seem overwhelming, but by following our advice and taking the appropriate "steps" we hope the process becomes that much easier. Now that you've decided you're ready, reviewed your credit, and met with a lender, the fun can begin. Next week we will talk about shopping for a home.
