Don't Shop Backwards

From The Observer and Eccentric By David Mully

Most of us shop backwards for a home because we go about it the same way we go about buying a major appliance, a car, or any other large purchase.

First, we look at homes on the market – we compare them, evaluating their features against our own desires. At some point, most of us engage a professional salesperson – a Realtor – to help us. Then, once we’ve reached a final decision on a home, we call in the finance person to line up the mortgage. Many real estate professionals recommend reversing the usual buying process and starting with the financing, by selecting and visiting a mortgage lender before you begin looking.

Experts list [two] good reasons to visit a lender before you begin your home search.

1. You’ll expand [your] home finance options. There are so many choices available for financing a home. If you haven’t shopped for a mortgage recently, you’ll be surprised at the range of options you have to choose from. Lenders offer numerous variations on the basic mortgages, including fixed rate mortgages and a wide variety of adjustable rate mortgages. Each type of mortgage loan offers specific benefits to the home buyer – benefits that can be significant. One may require a lower down payment, for example, while another provides specially reduced monthly payments for a specified number of years. A third type may offer more relaxed criteria, making it easier to qualify.

All these new choices add up to a single conclusion: Finding the right mortgage for your situation could save you money or enable you to afford a more expensive home. But you won’t be able to take advantage of these potentially significant benefits unless you know about them, by shopping for your mortgage before you shop for your home.

2. You’ll shop for [your] home – and the unsettling questions – Will I qualify? – looms before nearly every homebuyer, except the ones who have already been to a lender. When you see a lender first you can review all the financing options available without the added pressure of a contract hanging in the balance. You can explore the types of mortgages your lender offers, and find the one that gives you the greatest benefits.

Your lender can gather information about your financial resources to give you a good idea of exactly how large a mortgage you’ll qualify for.

Many lenders let you go one step further and can pre-approve you for a mortgage up to a certain amount with interest rates that remain locked-in while you look for a home.

This information was provided by Great American Mortgage Corp. Contact them at (800) 240-9448 for additional advice.

David Mully is president of Mortgage Search, a company that offers consulting services. He also writes articles for mortgage industry publications and is a member of the National Association of Real Estate Editors. To contact him, call 1-248-669-6900 ext. 227 or mail him at P.O. Box 485, Novi MI 48376. You can access Mully’s Mortgage Search column and current mortgage rates on-line at http://www.observereccentric.com/realestate