When to Apply
Some people wait until after they make an offer on a home to get approved for a mortgage, but many buyers get pre-approved for the following reasons:
A lender can either pre-qualify you or pre-approve you. With pre-qualification, you are given an estimate of what you can afford. It is not a guarantee. When you are pre-approved, you get a commitment from the lender to provide a mortgage for up to a specific amount, barring any major financial changes or problems with the house. If you are just starting to look and not sure when you are going to buy, getting pre-qualified is sufficient. However, once your home search turns serious, it is a good idea to get pre-approved. The pre-approval typically lasts for 30-60 days.
Finding a Lender
Applying at financial institutions where you already have a pre-existing relationship is often a good place to start. Some lenders let you apply for a mortgage online, but if you have questions, you may want to apply in person with a loan officer. There are different types of lenders, choosing one that fits your situation.
Credit Unions – Credit unions are non-profit financial institutions owned by their members Many offer programs for first time home buyers and can assist with pre-qualifications and pre-approvals.
Seller Financing – Some homeowners may be willing to provide financing. In this case, the seller takes on the role of the lender. This allows the seller to potentially sell the home faster and make a larger profit. The buyer and seller sign a promissory note and record a mortgage, or a deed of trust, with the local public records authority. Seller financing may or may not be reported on your credit report.
Avoid lenders who ask you to falsify information, sign blank documents, ignore your questions and concerns, or put excessive pressure on you.