| Now you're
ready to shop for a lender. It's very important that you select a
lender and get pre-approved BEFORE looking at houses. Having a
pre-approval letter in hand tells the seller and real estate agent
they are dealing with a serious, qualified buyer. This may give you
an edge when negotiating. You also will not waste time looking at
houses that are out of your price range. |
| 1. |
LENDER
SPECIALTY – You may be surprised to know that most mortgage
lenders specialize in particular types of mortgage loans. Here are
the most common categories: |
|
a.
|
Conventional
- existing house - 5% or more down payment - some seller assistance
allowed for closing costs |
|
b.
|
FHA
- existing house - less than 5% down payment - seller assistance
allowed for down payment and closing costs |
|
c.
|
VA
- no down payment - seller assistance allowed for closing costs |
|
d.
|
FhMA
- rural development program |
|
e.
|
New
construction - building a new house on vacant ground |
|
f.
|
Renovation
- repair or renovate an existing house |
|
g.
|
"B,
C, D paper" - tough credit problems or hard to verify income |
 |
| |
Call
around and select a few lenders who specialize in the type of
mortgage you need. For assistance finding a mortgage lender, call
The Closing Specialists®
(TCS) at 888-680-5177. We work with lenders in all categories and
can help point you in the right direction. |
|
| 2. |
COMPARE
INTEREST RATES AND "GOOD FAITH ESTIMATES" - There's
more to shopping for the best deal than just comparing interest
rates. Each lender will provide a "Good Faith Estimate"
which will disclose other costs associated with the transaction. The
costs disclosed on the "Good Faith Estimate" are basically
divided into 3 categories. |
|
a.
|
Actual
lender fees - controlled by the lender - Use this section to
carefully compare lender charges. |
|
b. |
Fees
for required services - Estimated fees for services being performed
by third parties. The lender does not control the fee, so consider
the quote merely an estimate. (The Closing Specialists®
fees fall into this category. Call us directly to get our fee quote
or use our Title
Insurance Rate Calculator.) |
|
c. |
Interim
interest, escrows for taxes and insurance, and proration of taxes.
Commonly referred to as "prepaid items," this section of
the "Good Faith Estimate" should not be relied upon when
comparing costs. Here's how these figures are determined: |
|
|
1)
|
Interim
interest - The maximum interest you could be charged at closing is
31 days. The loan officer can make the estimate look high or low by
adjusting the number of days quoted. The actual amount you will pay
at closing is determined by the actual date of closing. If you
prepare for 31 days, you're working with a good conservative number. |
|
|
|
2)
|
Escrows
for taxes and insurance - If your lender is going to escrow for
taxes and/or insurance, the loan officer will give you a rough idea
of what to expect. The estimate can be made to look high or low
based on the number of months the loan officer uses. Do not rely on
these figures when comparing costs. Basically all lenders who escrow
will use the same figures at closing. All lenders adjust the final
numbers based upon actual tax bills and the date of closing. We
suggest you always use at least 10 months of escrows to keep your
expectations conservative. |
|
|
|
3)
|
Proration
of taxes - At closing, there will be an adjustment between seller
and buyer for taxes already paid or due later in the year. Lenders
typically do not include prorations in the "Good Faith
Estimate". |
|
|
| 3. |
GET
PRE-APPROVED - Now that you have selected a mortgage lender you
are comfortable with, have your lender establish what kind of
mortgage is best for you and issue a pre-approval. This is also the
best time to tell your lender that you want The Closing Specialists®
to handle the title work and closing for you. Click here
to print a form you can use for this purpose. |
Click here for a printable version of this page