Articles & Tips
Shopping for Mortgage Loans: What is the Timeframe?
For many soon-to-be homeowners, shopping for a home involves contacting a real estate professional and visiting homes for sale. In actuality, however, the savviest home buyers understand that the process of shopping for mortgage loans starts at the same time, or even before they even set foot in their first open house or any home that is for sale. By starting shopping for mortgage loans early on, home buyers gain valuable information about the type and amount of loan funding they can receive, and they also allow themselves more time to shop around to select the best deal from the competitive world of mortgage loans.
One of the advantages to shopping for mortgage loans early on in the home buying cycle is that an experienced loan expert can help to determine how much house a home buyer can actually afford. This will save time and effort, as the home buyer will be able to narrow their list to homes that fit within their mortgage budget. Loan experts have experience and access to current home mortgage loan underwriting guidelines so that they can accurately assess the maximum amount of money and the respective mortgage interest rate that lenders will loan in a specific situation.
More specifically, experienced mortgage lenders can assist home buyers by helping them through a process known as mortgage pre-approval. This is similar to submitting an application for a mortgage loan, but with the exact house still to be determined. The mortgage expert will carefully examine the home buyer's credit history, proof of income, debt and obligations, and financial assets. Once all of these factors are considered, the mortgage expert provides the home buyer with a maximum loan amount for which they are already approved. Not only will this step help to speed up the process of shopping for mortgage loans once the house to be purchased is selected, but as mentioned previously, it will help to narrow the field of houses to be considered for purchase.
Over the past few decades as more and more entrants into the mortgage lending market have appeared, the sheer volume and variety of available mortgage loan products has grown exponentially. Home buyers are often overwhelmed by the various loan types, which include such colorful phrases as balloon mortgages, no down payment loans, and negative equity mortgages. It makes good financial sense to begin the process of shopping for mortgage loans early; this way the home buyer has plenty of time to climb the steep learning curve in order to understand all of the mortgage offerings that are available to them.
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