You've decided to take the plunge. It's time to become a homeowner instead of a renter - so you begin reading every real estate ad, driving around neighborhoods, and getting a good feel for where you want to be.
You may even contact a Realtor and begin looking.
But that's not the first step you should be taking.
The first step should be finding a lender. There are three good reasons for this. The first is that not all lenders are created equal. In fact, there are vast differences. For starters, different companies offer different programs and different fees and costs.
Some charge a minimum, and some add on “junk fees" until your eyes blur.
You want to know what that loan will cost in terms of fees - not just the final percentage rate your loan will carry. A lender may not want to give you a good faith estimate until you've chosen a house, but you can ask for a run-down on the fees you can expect - along with the dollar amount they'll add to your closing costs. .
The personality difference is also worth consideration. You'll be working closely with your lender for several weeks. If he or she makes you feel uncomfortable - or even inferior - then you won't be happy. Choose someone who is easy to talk with and who treats you as an equal. Perhaps more importantly, choose someone who will answer every one of your questions in a clear manner.
The second is that having a pre-approval letter could mean the difference between getting the house you want and losing it.
If you offer on a house and can show that you are able to buy it, your offer will be seen more favorably than the same offer from someone who has not pre-qualified. If you have no pre-qualification letter and your offer is contingent on getting a loan, it means the sellers only know you want the house - not that you can actually buy it.
Consider the seller's point of view. Would you want to take your house off the market on the hope that your buyer will be able to get financing, or would you rather keep accepting offers until you know he or she has the ability to buy?
Lastly, a good lender will be a help when you get ready to make an offer. Some loan programs allow the sellers to pay a percentage of your closing costs, so in some cases you might want to offer more and ask the seller to pay costs. Even if you have a substantial down payment, it could make a difference in your overall costs. For instance, it could push you over the 20% down payment that eliminates Private Mortgage Insurance. Your lender will advise you about how to structure your offer to make best use of your own cash.
Begin your home search with a visit to your lender - everything will go more smoothly as a result.
Marte Cliff is a Freelance Copywriter and former real estate broker.
Two of her e-books were written to help real estate buyers avoid the pitfalls she saw during her 19 year career - and during her 20+ years as chief bookkeeper for her husband's custom home building business. The newest addition is a collaboration with her husband - Home Building Simplified. It outlines the steps in home building and offers a “heads up" about all the decisions you'll need to make. Read about it at: http://www.yourhomebuildingsite.com