With the state of the real estate market heating up, more and more people are thinking of purchasing a home; this is especially true for first time homebuyers.¬† Although most of these prospective home buyers think that they know enough to place a bid on a home, they may not know enough to make an educated decision on whether or not they should place a bid on a home.¬† Many first time home buyers start the process by finding a house they love before they have secured financing for that home.¬† The first thing any serious home buyer should do first is to secure a loan and then go searching for their perfect home.
Before you contact a real estate agent it is important that you know how much you are approved for.¬† This will give you a price range to provide the real estate agent with so that they can narrow down your options.¬† This will also help you avoid wasting time looking at houses that are out of your price range.¬† Knowing where you stand financially will not only make choosing a home easier, it will also help you avoid purchasing a home that you may later regret.
When you are considering applying for a mortgage it is important that you speak with more than one lender.¬† Shopping around with different lenders will ensure that you receive the best deal available on the amount of money you need to borrow.¬† Don‚Äôt forget about contacting credit unions as well, many people tend to focus more on the larger banks and often overlook how helpful a credit union can be.¬† It is also important that you ask each lender about the different types of loans they offer and that you clearly understand your obligation on each type of loan.
While comparing the interest rates of different lenders, you should also find out about the fees associated with acquiring a loan.¬† These fees can include appraisal and application fees, as well as closing costs and escrow fees.¬† You should also look into obtaining mortgage insurance during this time as well.¬† If you are not going to be putting 20% down, many lenders will require you to have mortgage insurance.¬† By doing this step, you will have a better idea of what expenses you will be faced with on the day of closing.
Once you have narrowed down your choices and selected a lender whom you feel comfortable working with you are now ready to begin your search.¬† When contacting real estate agents, inform them that you are already preapproved; not only will this make their job easier, it will also make finding a home you are happy with a much more enjoyable process.