Money Matters

Timing loan shopping with home shopping

Written by

Austin Light

Posted

March 18, 2019

We’ve been in the home loan shopping game a long time, and we’ve found that when it comes to shopping for their actual home, people fall into one of two categories: Those who secure some kind of funding before they shop, and those who don’t.

Neither one is necessarily better than the other, but you should know the pros and cons.

Before home shopping

Let’s be honest, when you’re thinking about buying a home, you’re probably already poking around online, looking for houses for sale, scouting neighborhoods and daydreaming. So, when we say, “before home shopping,” that online stuff doesn’t count. We mean before you actually go out and start going to open houses and engage a Realtor (if you decide to use one).

If you’re in this group, before you get in your car and go inside some houses, go to LendingTree and compare loan offers, then you look at houses with a pretty firm budget in mind.

Pros:

    • You’ll know how much home you can afford
    • You’ll have your rate as close to locked in as it can get
    • You’ll have a firm offer that you can build negotiation room around

Cons:

  • You might have to restart your search if what you thought you could afford and what you can actually afford end up further apart than you anticipated
  • If you’re searching in a hot market, slowing down to get your loan offer squared away could cost you a home you were hoping to put an offer on
  • If you prefer to keep it real and know just how much you can afford before you go to crazy daydreaming, loan shopping before makes the most sense.

After home shopping

Some people just can’t wait to get out there and see some houses. They go to neighborhoods they like, find a place they love, then worry about financing later. Some of these people are also home-buying veterans; they’ve been through the process before and have a pretty good idea what they can afford.

Pros:

    • You get to see homes right away, nothing’s stopping you!
    • You can weed out neighborhoods before you put in offers
    • You can take your time, since you haven’t actually engaged lenders yet

Cons:

  • There could be a large gap between what you think you can afford and what you can actually afford
  • There are chances rates could rise over the days or weeks you spend looking at houses
  • The market you’re shopping in can have a huge impact on which version you choose. Either way, you can still find a competitive loan offer at LendingTree. Shopping loan offers is quick and with more mortgage companies taking their applications online every year, you can move faster than ever through the buying process.