First things first, you want to know your credit score, and if you haven’t already, work on improving it. There are a variety of different ways to get a credit report, which is important for you to have handy when going into a meeting with a potential lender. When you have a lower credit score, that makes you a risk, and your interest rate will be higher. On such a large purchase, you want to get your interest rate as low as possible. Work on your debt, pay your bills on time, and you’re well on your way.
Once you’ve done that, you want to understand what the lending game is all about. There are three major lenders: Banks, Credit Unions, and Correspondent Lenders.
Mortgage lenders, through your financial institution, want to see you do all of your business through them. Credit unions are member-owned institutions that typically have reasonable rates for their members. Correspondent lenders are local companies that pay for your home and then immediately sell off your loan to someone in their company network.
You can perform a lot of research online, like finding the best rates, highly-reviewed lenders, and more. Any online rate won’t take your credit score into account, so be aware that the rates out there are just ballpark figures. One of the many reasons to hire a realtor is that they might have a lender they work with, or who they have recommended in the past that could be the one for you.
Once you’re pre-approved, you want to settle on a realistic budget. Maxing out your budget is not an ideal scenario, and you want to make sure you can comfortably afford your new home.
Having pre-approval also means that you’re ready to purchase and might win in a bidding war against someone who hasn’t taken steps to get pre-approved.
When you’re in the process of settling on a lender, you want to ask many questions to make sure you understand everything. It’s great to learn about their process, how to contact them if you ever have any issues, and how long getting approved and purchasing the home will take. If you’re a first-time buyer, you’ll want to know details on the down payment and if their fees are included in the mortgage or need to be paid upfront. If you’ve found a true professional, they will help you through the process and be forthcoming with any information you may need.
A lender with many years of experience will be able to give you more information than you’ve likely considered. The mortgage lending landscape is fiercely competitive, so if you have found a lender who wants to establish a genuine relationship and is there to support you, stick with them.
About the Author: Greg Covell is a Vancouver area Realtor who is dedicated to helping homeowners sell their home or buy their dream home. He services the areas surrounding Vancouver Canada such as Maple Ridge, Langley and Pitt Meadows.