Selecting a Lender deadline
Selecting a Lender
Selecting a lender is the first step before looking at homes. Before you shop for a home it is important to get pre-qualified for financing. That way you will know exactly what your comfort level and budget is.
What you don’t want to do is pick a price and later learn that the finances is not what you thought.
Now what do you do? If you are financing a home the first place you want to start is selecting a lender. Selecting a lender is very important step because the lender will actually prequalify you for buying a home.
Prequalification will tell you the maximum amount you can qualify for, type of loan program, the estimated monthly payments, and estimated interest rate based on your credit at that point in time.
You can also secure information on your closing costs you will need. The lender will need to see all documentation such as bank statements, payroll checks, along with other assets and liabilities to confirm you pre-qualification.
If you do not select a lender to uncover these details, you do not know what price range to search for a home or how much money you need to set aside to cover your home purchase. Or worst yet there is a unknown blemish on your credit report that prevents you from qualifying for a loan or even getting the ideal interest rate.
A smart buyer will understand the finance details before they contact a buyers agent to assist in the home search.
With your prequalification confirmed you are ready to actively search for a home. You will need a prequalification letter from your lender to submit any offer on a property.
Finding a Lender
Selecting a lender can be done through a mortgage broker, bank, or credit union, each will provide loan services. It is easier for the transaction if the lender is based in Florida or has been recommended from a trusted resource. More often, going with a mortgage broker will provide more individual personalized service.
Contrary to some beliefs, a mortgage broker does not cost a buyer more, in fact they will shop around to find you the best rate. A bank or credit union is less personalized and loan officers are less involved in the details of the loan process because your file gets handed off to processors who have no interest in making you happy.
Buyers typically contact 2-3 lenders maximum. Most reputable lenders will quote very close to each others rates and fees. Very often I see buyers just focus on the financial numbers, and forget about the lenders knowledge base to understand requirements, convey financial information, fix unexpected problems, and that are honest and actually stand up for the buyer when issue arises.
When to Choose a Lender
Buyers like to shop around before selecting a lender. 98% of buyers have a lender selected before going under contract on home. So its ideal to find the lender before the home. However, if you need some time to finalize a lender, you will have 5 days after an accepted contract to confirm your lender.
The contract allows the buyer 5 days to do a loan application. This deadline confirms the buyers intention to move forward in the transaction with that lender.
It is important that the buyer make a timely loan application. A delay will hold up the processing of your transaction and you could be in breach of contract if certain deadlines are not met.
If you are buying a new construction home, then it is even more important to select a lender before contract, especially if you know you will not be using the builders preferred lender. The builder will want to type in your lender into the contract from day one.
Getting confirmed mortgage fees
Nationwide the entire loan process has changed as of 10/3/15 making the loan process more consumer friendly. Once you do a loan application, your lender will have to issue you a Loan Estimate (LE) with all the potential charges for your closing within 3 days. To be accurate, lenders will immediately contact the title company to obtain your exact fees for closing.
This is because if the lender does not get accurate fees and closing fees cost more, they are required to issue you a credit back dollar for dollar at closing.
Your interest rate will be fixed only when you decide to “lock in” a rate. You cannot lock in a rate until you select a house to buy.
Getting a loan and buying a home can seem like a big process to understand. Buyers Broker of Florida can assist you in understanding home buying and the major steps to your loan and recommend reputable experienced mortgage broker to assist you in making your decision of purchasing a home a dream come true. 407-539-1053