While the idea of purchasing a new home is very exciting, the reality of the process can be extremely intimidating and stressful. Many home buyers put the proverbial “cart before the horse” and search the Internet for homes before actually going through the process of prequalifying to ensure that they actually qualify to buy a home and for how much. Such impulsiveness can cause home buyers feelings of disappointment (from not being able to afford the home that they want) and frustration.
When you begin to search for a loan you will be overwhelmed by the amount of propaganda attempting to obtain your business. You will hear radio ads, television advertisements, information mailers, Internet solicitations, suggestions from friends, referrals from real estate agents, and on and on. You might not know where to start or whom to trust.
The first thing you need to do is take a deep breath. Unless you are paying cash, every home purchase has two processes. The first is the real estate process. The second is the loan process. You need to find an advocate for both processes that you feel will be the best guide through each process. As far as the loan process is concerned you should be looking for transparency. For years lending has been an enigmatic process that causes stress to potential home buyers. Look for a lender or broker that you feel is thoroughly explaining the process, including, how and why you are receiving the interest rate that you are being given.
Interview different lenders/brokers until you find someone that you feel comfortable with. The advantage of using a broker over a direct lender is that brokers have the ability to shop your loan to many different lenders. The ability to shop your loan is an incredible advantage. A good broker will not only shop for the best interest rate but also for the lender that has the most reasonable underwriting process. Some lenders provide good interest rates but will drag you through the mud during the process, so much so that you may feel angry and violated. Staying away from lenders with over the top underwriting is key to providing you with a smooth purchase loan process.