Find a Lender First
When I began meeting with real estate agents, they always asked if we had approached a lender. When we met with lenders, their first question was always whether we had a property in mind. This left us totally confused.
So what’s the right plan?
Potential home-buyers should always meet with a lender before they start
their home search, this helps you decide which mortgage program is best
for you. Mortgages are originated either by mortgage brokers or
traditional banks. Because the industry is so heavily regulated, it
doesn’t really matter who you choose for your mortgage — the
qualifications will be largely the same, Jennings says. However, small
banks are likely to offer fewer mortgage options, while larger lenders
usually offer more.
If your income and credit qualifications are well above the minimum
range and your employment history is steady, many lenders will feel
comfortable providing a pre-qualification letter.
When you’re ready to buy a
home, you can strengthen your offer with either a pre-qualification or a
pre-approval letter from your lender. A pre-qualification, where a loan
officer reviews the applicant to make sure that they meet the minimum
requirements, is the most common, Jennings says. If your income and
credit qualifications are well above the minimum range and your
employment history is steady, many lenders will feel comfortable
providing a pre-qualification letter. “In the industry it’s known as a
slam-dunk borrower,” Jennings says.
However, if your
application is on the cusp of qualifying because of credit or income
issues, you may choose pre-approval. “The file is actually formally
approved subject to the borrower finding a home,” Jennings says. “I do
these on occasion when I don’t feel comfortable signing off on a
pre-qualification letter.” Although a pre-approval takes longer up
front, it can actually cut time between your offer being accepted and
closing, because much of the review is already done.