Where do i go to get pre-approved that wont have me pick out a house first? i need to know how much i can take on before i look.

Asked by Morgan Bigney, Rexburg, ID Sat Nov 5, 2011

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Trevor Curran, Mortgage Broker Or Lender, Great Neck, NY
Sun Nov 6, 2011
Good morning Morgan,

You can be Pre-QUALIFIED for mortgage financing without having identified a property. A Pre-APPROVAL requires that you have identified a property. Unfortunately these similar yet different terms have been incorrectly bandied about by mortgage professionals for too many years, thus your perfectly reasonable confusion.

In recent years HUD revised the rules regarding the issuing of Good Faith Estimates (GFE) and Truth-In-Lending (TIL) forms to mortgage loan applicants. Well, revised may be the wrong word. Rather I should say, reminded the mortgage industry of the rules. (Funny how so much of the mortgage industry forgot the basic rules of lending, huh?) To issue a Pre-APPROVAL a Lender must issue a GFE/TIL. In order to issue a GFE/TIL a property address must be provided. A Pre-qualification does not require either.

Get a referral to a Local Mortgage Banker. Mortgage Bankers in your community will provide you with a much higher quality of service and financing options than any "Big Bank." Local Mortgage Bankers have long been the source of excellent financing options for homebuyers. Further, Loan Originators who work at Mortgage Banks are LICENSED whereas Loan Originators who work for the "Big Banks" are only REGISTERED. There's a BIG difference.

Sit down face to face with your Mortgage Banker to be thoroughly prequalified. The Mortgage Banker will review all facets of your loan request to answer your questions with regards to the types of loans and maximum loan amounts you could qualify for.

You can verify the License of any Licensed Mortgage Loan Originator at nmls.consumeraccess.org

Trevor Curran
NMLS #40140
Web Reference:  http://tcurranmortgage.com
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Jim Paulson, Agent, Boise, ID
Sat Nov 5, 2011
I just deleted my other answer since it referenced another agents post whom has deleted theirs so mine also became irrelevant. (in case you wonder why it might have shown up on your email notification but been here).

Best of luck!
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Judi Monday,…, Agent, Green Valley, AZ
Sat Nov 5, 2011
Ask the agent who is working with you for a recommendation on a good mortgage broker in your area. They are happy to sit down with you and determine how much of a mortgage you can qualify for before you begin your search.
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Francesca Va…, Agent, Townsend, DE
Sat Nov 5, 2011
Hi Morgan,

You're absolutely doing things in the right order. I recommend working with a mortgage broker rather than a bank at first. They often have a variety of loans available to them that someone at a bank does not In fact, my bank teller didn't even get her loan through the bank she works for since there were other places that offered better rates. You don't have to pick out a house first, in fact, I wouldn't recommend you go with anyone that says you do. A preapproval is the first step in the home buying process; it's equivalent to checking your bank account balance before going shopping so you don't overdraw or fall in love with something you then find out you can't afford (and of course anything you can afford doesn't measure up).

I also highly recommend getting a few preapprovals so that you have some options and you can work with someone you know, like, and trust. If you wanted some more information on the buying process, I can help you there too.
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Jim Paulson, Agent, Boise, ID
Sat Nov 5, 2011
Great question Morgan, it is one that is asked all the time and you will get a variety of answers since there is no one perfect answer.

Think of it as buying a car. Your friends at Ford say come to their lot first; your friends at Dodge says they have the newest cars; your friends XYZ imports say they are a better value; a friend has a friend that says a Honda is kind of an import but assembled in America so it is better, yet you read online that at the used car lot someone else already paid for a lot of the upfront depreciation so they are a good deal.

Therefore, what I tell my clients is to start with yourself, not with a lender or a Realtor! Take first time home buyer classes that teach you the process so you know what to compare and how to compare. Find out what your strengths are and your weaknesses so you can team up with a lender and a Realtor that bring value overcoming your weaknesses. For example, if you need help with lower down payment or closing costs, you might choose a different lender that if you were putting 20% down and could pay your own closing costs. If your credit is good, you will have more choices. Some programs cater to low to moderate income buyers while other due to the lower income would decline you, etc.

The basic rules are pretty simple: 1) credit: if your credit is good, you can pick an choose between lenders, remember that online lenders only skim the cream off the top; 2) down payment: the more you put down the better it is for you and the less restrictions. 20% or more is preferred, but there are programs with only 3 1/2 % down and even still some 100% financing options available; 3) closing costs are different for each type of loan. Make sure you know what to expect from each.

What I do when I counsel my buyers is I do it all backwards (kind of like when you got stuck on a math problem in school you could look up the odd numbered questions in the back). Instead of trying to teach my clients about each loan program, I learn about what they have for resources and let them start learning specifically about the loan options that work best for them! Why take the time to explain about things that are irrelevant to you?

Also, some of the first time home buyer classes like Housing and Urban Development (HUD) has a program called Finally Home. I have taught the real estate segment of that for years. Upon completion, you get a certificate that can be used with some lenders on programs that might reduce down payments, closing costs, etc. and even qualify you for special programs since they feel better about lending to people that have taken the time to learn about the process!

I know I gave you a path, not an answer, but I hope it helps!
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