Rebecca,

Your best to use a mortgage company that is both a lender and a broker, as there are benefits to each. A broker can shop around for you to get the lowest rate as they have lending partners from across the country. A lender can offer speed and flexibility with in-house underwriting and can fund immediately at your convenience. Location shouldn't matter. You can use a broker lender in your home town if they have the best rates, or you can use a national lender for the same reason. I would recommend you so your research. Purchasing a home is probably the biggest investment you'll ever make, so you owe it to yourself to do your homework.

As for the pre-approval – and now is a perfect time to purchase a home with industry low mortgage rates and an $8,000 federal tax credit for first-time homebuyers – you should contact a licensed mortgage professional as soon as possible to get pre-approved. Also, don't be confused with the difference between pre-qualified and pre-approved.

A pre-qualification is simply a letter issued to a borrower who is interested in purchasing a home. This pre-qualification letter indicates the size of a mortgage loan that you can manage to pay on a monthly basis, which is a determination based on monthly income and any outstanding recurring debt. Even if a pre-qualification letter is issued, it must not be mistaken for a commitment to lend. The pre-qualification letter simply indicates to a seller that you are financially qualified to make an offer on a home.

A pre-approval is a level above a pre-qualification letter. A pre-approval includes the verification of employment, credit history, down payment, etc. Once this information is validated, the mortgage application is submitted to a credit officer (underwriter) to make a final decision. Once approved by an underwriter, a pre-approval certificate (commitment to lend) is issued. This commitment to lend allows for borrowers to close very quickly once a home is found. When a borrower has a commitment from a lender, it can drastically improve the negotiation of a sales price with a seller since it is as close as a borrower can get to actually having the cash in hand to pay for a home.

I hope this information helps. Best of luck!

Regards,
Total Mortgage Services

Additional clarification:

There is a form distributed by a real estate special interest group that uses the term exclusive buyer agency incorrectly. They were notified of the error and they didn't correct the form.

You can see a thorough discussion of the term and its use here: http://www.cognabooks.com/eba/index.html

You can also just do a search for "exclusive buyer agency in Michigan" to get additional information.

Also, real estate companies that practice 'designated buyer agency" are required to admit it in the state mandated agency disclosure form. So even though they claim to offer buyer agency you need to check the fine print.

In buyer agency the whole company represents you. In designated agency one licensee and possibly a supervisor represents you. Other licensees can work for sellers or for other buyers interested in the same property.

Designated agency is a creation of real estate special interest groups to benefit large brokerages. If you want to know how consumer advocates view it do a google search for "designated agency ralph nader"

It shouldn't be a surprise that so many licensees want to claim they are buyer agents when in fact they are designated buyer agents.

Jon Boyd
Past President, National Association of Exclusive Buyer Agents
Nationally recognized home buying expert
Broker/Manager The Home Buyer's Agent of Ann Arbor

Before you start looking at homes you should speak to 2 or 3 local, reputable lenders to guage how much you are approvable for and what types of programs are available to you. I'd avoid the internet lenders because you just don't know what you are getting and there is a lot of misinformation out there. Rates and fees are going to be pretty similar from bank to bank lender so one of the most important things in selecting your lender is finding someone who you feel comfortable with. The comparison shopping is just to get a feel for that and also to make sure you are getting a competitive price. After all, a good deal is a state of mind.

I work out of Ann Arbor and would be glad to assist you in getting pre-approved. You can contact me via email at anthony.grech@bankofamerica.com or in the office at 734-528-5511. I'd love to speak with you and put together some ideas on how to best accomplish your goal of homeownership.

Tony

Hello Rebeccam,

ABSOLUTELY YES -- you should speak with lenders before you go out looking for a home. The reasons for this are many, but the main one is that you want to be confident that you are shopping in a price range that you will be able to get a mortgage for once you find and fall in love with a home.

You are in the midst a very exciting buyer’s market. The definition of a BUYER’S MARKET is that there are more homes for sale than there are buyers to purchase them. It’s the old law of supply and demand. Right now, the continuum is tilted towards you – the buyer. Even though you hold the power in this regard, without a pre-approval letter, you will NOT be able to submit an offer. This is especially true of bank owned or short sale homes. So, the proper and most efficient way to proceed is to meet with a lender.

DO make contact with several lenders -- and interview them. If you check my website, you will see a list of lenders. Call them, interview them, and delve into their experience, their philosophy, their competency, and what their experiences are with today’s real-estate market. Keep in mind that you are shopping for competency and service -- not just "rate" (or loan price). AND, you want to be able to reach out and touch the lender – so do not use an internet lender. There’s no substitution for being able to walk into a person’s office when you have questions, need help or when you feel that you need to exert yourself -- especially in those final days prior to closing. Please be aware that as you talk with different lenders, each subsequent lender will naturally offer better price and terms than the preceding – because they want to win your business -- so be sure to go back to the previous lenders (especially if you liked them) and discuss terms. In the end, it is a matter of putting the whole package together – service, competency, interest rate, and that personal fit that gives you the confidence and comfort level that this person is right for you.

Having this pre-approval letter in place prior to looking for a home or condo gives you a step up on the competition as you will be able to move quickly with your written offer once you find that special home. Although it is a buyer's market, competition with other buyers for those nice, competitively priced homes has been very steep lately. Position yourself so that all of your tools are in your toolbox at the ready so that you can move quickly and confidently when the property is right! This impresses the seller as well.

I work for Prudential Snyder & Company Realtors. I am an experienced Buyer Agent able to represent my buyer clients with ‘Exclusive Buyer Agency’. Furthermore, Prudential Snyder & Company offers you a more well-rounded approach as we also represent sellers (although not in the same transaction). What better way for me to help a buyer than to be able to understand the seller's mindset because I have walked through the steps of a transaction from their standpoint. This experience serves to make me an even stronger buyer agent than someone who works only one side of the transaction.

I will happily answer any questions that you might have. You have already gotten off to a proactive start by putting this question out on Trulia. I am a Trulia Pro. Please do check me out on Trulia to see my philosophy, blog, and how I have answered other questions.

It’s all about empowerment, and the best way for you to find a home that is right for you is to become empowered through educating yourself on the home buyer marketplace. This is how I will best serve you.

Just give me a call or email me directly. 734-754-3221 (24/7). ReneeBadall@gmail.com.

For sixteen years we've shopped and negotiated loans for buyers on an almost weekly basis.

The most important criteria in choosing a lender is the lender's ability to follow through with their commitments. This is what exclusive buyer's agents refer to as a "credible lender". There is no point in "shopping around" for a loan unless you are confident the mortgage company will be able to perform.

Because of the recent Home Valuation Code of Conduct requirements it has become very difficult for mortgage brokers to guarantee good appraisals. We are now recommending using only mortgage lenders or mortgage bankers for most loans.

And, you won't really be able to shop for your actual loan until you have a purchase contract in place because the loan pricing will depend on the loan amount and the lock period.

It is important to have a credible preapproval in hand before you start looking at homes, but since you can't find the best pricing at this early stage we recommend getting your preapproval with a credible lender who is likely to provide good pricing when you have a home under contract.

Since there is no one lender that has the best programs and pricing for every buyer, we normally make a suggestion for a preapproval at our first meeting.

As an example the best lender for a 20% down luxury home buyer I'm working with now doesn't even offer the zero down rural homes loan another buyer in the office needs. And the biggest lender in the country doesn't offer a loan for a local upscale condominium project but a local mortgage banker does.

Two more points:

Many of the local real estate companies have captive lenders and captive title companies that they use to generate additional income from. We represent buyers only. Our firm never generates income from loans or title services because we feel this represents an obvious conflict of interest.

Also, most of the major companies in the area no longer offer buyer agency services. Reinhart, Surovell, Remax, Keller Williams, and Real Estate One offices stopped offering buyer agency in 2000 and now only offer designated buyer agency. It is important to understand the difference and make sure you are comfortable with the shortcomings of designated buyer agency. Buyer agency and designated buyer agency are not the same.

Good luck in your efforts,

Jon Boyd
Past President, National Association of Exclusive Buyer Agents
Nationally recognized home buying expert
Broker/Manager The Home Buyer's Agent of Ann Arbor

Hello Rebecca M.,
I agree with my co-workers that it is best to get prequalified with a lender/mortgage broker before you try to tond your next home. If no other reason than not to disappoint yourself by viewing a home you can not buy.
One of my favorite lenders offers an excellent on-line application program that is very good. It is Ann Arbor Mortgage Company, their website is http://www.A2MC.com.
If you are not already working with another REALTOR please feel free to call me when you are ready to see houses. I am born & raised in Ann Arbor & I am uniquely qualified to help you. My cell phone number is 734.Mi.LANDS (645-2637).
Respectfully,
Todd Lands, Associate Broker, REALTOR,GRI,CSP,ABR
When you think of real estate, think of LANDS!

Hi there Rebecca,


Well, the answers below hit it spot on. Meeting with a buyers agent to have what is called a preview of coming attractions meeting or POCA as we tend to call this meeting in short the meet is no cost to you, as the buyers agent fees in our area are typically paid for by the seller, this wonderful professional advise comes to you as part of your home purchase. This meeting takes approxiamtely 45 minutes of your time, I am happy to come to you and meet in a place that is convenient this next week, or meeting for coffee is also great, and I can bring along a comprehensive guide to purchasing a home in todays market, local lenders to contact, as well as a timeline working back from your move date, and creating an outline that is specific to your homepurchase situation. Also included is a list of typical buyer costs that will need to come out of pocket. so you can properly budget for the upcoming months.

I am well experienced in buyers agency, and still very much love the business on it's worst day, and encourage you to call me and let's schedule a meet soon!

You can easily learn more about me.
http://www.CaitlinAmanda.com http://www.takeonewashtenaw.com http://www.AnnArborsRealMarketChat.com

I wish you all the best in your home search, and will attach my virtual office link if you are interested in beggining a search that you can save, and I can see.... FUN FUN FUN!

Caitlin

Rebecca,
It is definately wise to get pre-approved. The best lenders are those in the local area, who know the area and know appraisers.

If you are already working with a Realtor then ask her to give you 2 or 3 names so you can speak to them.

Rates are very similiar the difference will be in the fees. So ask each one to send you a GFI Good Faith Estimate of what your closing costs will be.

I have a team of 6 buyer agents if you need one.

Hi Rebecca,

Definitely have the pre-approval prior to shopping for homes. A couple of reasons: 1) You'll be armed with information knowing that you're qualified for certain property 2) Your pre-approval letter will present a huge impact on the seller's decision.

Prior to house hunting, I strongly suggest you contact your local Realtor in your area. She/He can guide you through the whole home buying process and most importantly, it does not cost you anything. Also, if you're a first time home buyer, there's an $8K Tax Credit that you need to know about. This incentive ends on Dec 1, 2009. So please contact a Realtor in your area. I can refer you to someone....let me know. Thank you!

Rebeccam ,
Yes shop first for comfort with the lender to get your pre approval from a reputable lender. Working with professionals makes a good marriage for a smooth transaction and time savings as advised below. Once you get an idea of purchase price, then you can go shopping with confidence. Does that make sense? Call us to help you go through the steps so you can feel comfortable. Diane, buyers agent, is ready at 734-845-6542.

Rebeccam,

It's taking a little longer to get loans back from underwriting lately and sellers are looking for offers with pre approved buyers. Anything you can do to speed up the process on your end will help. This best thing to do is get pre approved first. Not only will this have you ready for when you find a house you want to buy, but it will also let you know exactly what you can afford to buy and save you time from looking at houses that you may not be able to afford.