If you're planning on buying a new home this year, here are some tips for a smooth purchase!
Contact a lender sooner rather than later.
The sooner you take this step, the better! A credit pull is generally what holds people back, but most lenders can now do a ”credit soft pull,” which allows them to see your score without a formal inquiry or any impact to your credit. Initiating this process early allows time for any necessary actions that need to be taken, such as credit re-score efforts or filing your tax return. It will also help you clearly define your price point and monthly payment goals early in the search.
Compare lenders.
All operate differently, so it’s important to find someone you’re comfortable with and who can hit the ground running once you’re under contract! Some important questions to ask the lender: Are you available on evenings and weekends? Do you service your loans or will my loan be sold post closing? What are your lender-specific fees? How do you present rate options and keep me updated on rates throughout my search?
Get pre-approved, not just prequalified.
A prequalification is generally based on stated income and assets; pre-approval means the lender has fully reviewed credit, income and asset documentation. A pre-approval decreases the chance of any surprises coming up during the transaction and ensures that the lender has reviewed all documents upfront. It provides peace of mind for everyone involved!
Compare rates and be ready to lock.
If you’re rate shopping upfront, it’s important to compare apples to apples. Any rate is available on any given day—it’s just a matter of what you pay for it. A “no points” rate means you are not paying additional closing costs to buy the rate down from market. A rate quoted with “points” or “discount fees” means you’re paying additional upfront costs for that rate. Depending on how long you’re in that loan, you may or may not see the return on that investment.
Be sure your lender has your best interests in mind and isn’t presenting a low rate that comes at a high cost! A good lender will help you structure a loan that best meets your personal goals and achieves the greatest long-term savings. Remember, that doesn’t always mean the lowest rate!
Written by Lauren Nygren | Senior Loan Officer | Guild Mortgage