Q: I've paid off my student loans and have been working for a great firm for three years. I figure it's time to buy a home. Thing is, I have no idea how to look for a home or the mortgage I'll need to buy it. Can you give me a few tips?
A: We recommend shopping for a mortgage before looking at homes, as you'll want to know how much you can afford to borrow and consequently, how much you can spend on a property. You can also benefit by getting pre-approved for a mortgage. Here's why.
Many housing markets are competitive due to high demand for homes and low numbers of available homes. When considering multiple purchase offers, home sellers may prefer a buyer who has been pre-approved for a mortgage. This can reduce the time needed to close the sale and limit the risk of a last-minute problems with your mortgage approval.
If you're approved for a mortgage before you start your home search, you can focus on homes within your price range and avoid distractions associated with juggling mortgage lenders and house hunting.
The Federal Trade Commission advises consumers to shop and compare mortgage rates, loan costs and types of mortgages available. Request multiple mortgage quotes and compare them carefully before you select a mortgage lender and a mortgage loan. Discuss your mortgage needs with a few lenders and ask plenty of questions. Your first home purchase and mortgage choice are major financial decisions; it's as important to find a mortgage that best matches your needs as it is finding the house that will become your home.