Lenders
In my opinion this is where buying a home gets frustrating. I recieved the following valuable reminder from a friend which helps me to keep things in focus while looking for a home. When you are the buyer, no one works for you. Everyone is working for the seller, trying to get you to spend your money. Sure you hold the power; no one gets paid until you feel ready – so they will do their best to get you feeling ready.
Well there are all types of laws and contracts which state differently and which do a pretty good job of keeping people honest. Yet, a snake is still a snake and no law will make a snake into a cute little bunny rabbit. So your job is to look for a lender, realtor, insurance agent, and home inspector that you feel you can trust. Good Faith Estimates, Turth in Lending Laws, Licenses and Bonded service personnel help you feel a bit more secure.
As I started looking for a loan, I went to get a prequalification letter. Many realtors begin to take you seriously after you have the prequalification letter. Ironically, many lenders take you seriously after you and your realtor have found a home.
Your Realtor will usually have one or more “preferred lenders” with whome they prefer to work. Depending on the lender and realtor you have chosen and your specific needs, these may be lenders that specialize in high risk loans, easy loans, or good loans. Most lenders will have a variety of loans that you can choose from. You should understand what type of loan you are getting into, there are plenty of lenders out there who will entice you with an Adjustable Rate Mortgage when rates are low – once the rates change, these often become bad loans with horrable interest rates. The current Subprime loan debacle of 2007 is a great example of bad lending practices that are causing many families, businesses, industries and economies horrible financial difficulties.
After meeting with the lender my Realtor recommended, I also contacted several other lenders in the area and the internet. Many of the lenders seemed fairly aggresive at first, but their interest usually wanes after a few weeks if you haven’t found a home. I contacted several of them and would not commit to use any of them until I got a deal from one of them that the others could not beat. This obviously added to their frustration, but it was a good exercise for me and helped me learn a lot about loans while weeding out the higher priced lenders.
In the end it turned out that I was able to lock in the best deal with the lender to whom my Realtor had referred me. I had chosen two different types of loans from the lender, one 100% loan and an 80 /20 loan. I locked in the 100% loan early on but not the 80/20. This way by the time I find a home, if interest rates are down, I can go with the 80/20 loan. If they are up, I will take the 100% loan I had previously locked in.
