Step 2 to Purchasing a Home

As stated in the last entry, I am going to go through the 10 steps on my guide to purchasing a home. Last time I talked about getting a buyers agent. Step 2 is to get a lender and get qualified. Make sure you start talking to lenders before or while you start looking at homes. We can suggest some that our clients have had success with. Your lender needs to figure out how much you're qualified for and what kind of rate that your credit score is going to give you. This is going to have the biggest effect on your monthly payment. The lender that does this can also give you a prequalification letter. You are not obligated to ultimately use that lender. You may choose another later. But having a prequal letter is almost a prerequisite for making an offer on a home these days. For good realtors, it's a prerequisite for them showing you property. Ultimately, it also makes your offer stronger than someone who is not prequalified.

Choosing the right lender can save you a lot of money. A good buyer's agent can certainly save you lots of money during the negotiating process. It's up to you to negotiate with the lenders until you get one that you're comfortable with and one that is willing to cut their fees to help you. From my experience, they will never give you their best deal the first time. Kind of like a car dealer, you have to haggle. I know it's a pain, but a lower interest rate can save you money every month for 30 years!! That adds up. Not only that, but they will also negotiate their fees. They have ways of cutting the application fee, the appraisal fee, the credit report fee, the origination fee, etc. Here's how you do it. You must go to a minimum of 3 lenders. Get a quote from the first one and take it to the other 2. The quote is called a good faith estimate. The other 2 will beat the first one. Then you take those 2 back to the first one, and so on. You can do this a couple or 3 times until they run out of negotiating room. During this time, you will get a feel for who you can trust. Also, require them to give you quotes on the exact same kind of loan with the same parameters. They will try to play with attorney fees and insurance fees to make their quote seem better. These fees for other things are on their good faith estimate. Make them all play by the same rules by using the same numbers for the fees that aren't theirs. Having said that they should all play by the same rules and use the same kind of loan, let me say that some lenders can be more creative than other ones. There are some great programs out there for first time buyers, teachers, doctors, etc. All my lender friends are going to hate this blog. They don't want you to know that you can negotiate.