Mortgage Loans: Compare To Save

Many families buying a home complain about the difficulty of the mortgage application process. Their bank, credit union, or mortgage bank underwriter continues to ask for financial documents and statements, which raises concerns over approval. Sometimes, when the long-awaited mortgage approval arrives, the rate is a bit higher than the borrower expected.

Preapproval for a mortgage loan makes the process bit easier for borrowers. In almost all cases, the borrower initiates the mortgage loan application with the lender. Documentation of income, prior year tax returns, and bank records to verify monthly spending are submitted to the lender. However, a preapproved loan demonstrates the lender’s commitment to funding the borrower, so the entire process of closing the loan is eased. There are fewer surprises with a preapproved loan.

Financial institutions sell money. The mortgage loan rates advertised are rates the lender gives to its best customer. According to “Inside Mortgage Finance” publisher Guy Cecala, the lender isn’t required to give the mortgage loan applicant that rate, so it’s important to shop available rates and lenders. Although the mortgage application process is exhaustive and sometimes almost painful, it’s important to comparison shop. Lenders are competitive and want reliable customers who make payments on time.

Ask each lender for a good faith estimate. This estimate provides a breakdown of mortgage-related fees the buyer signs off on at the real estate closing. Most lenders’ fee structures differ in small or large ways, so it’s important to analyze these numbers and ask questions. Since lenders will negotiate at least some of these fee items, the buyer should compare mortgage loan packages to save money on the large purchase of a home.

Kuba Jewgieniew writes real estate advice on behalf of Realty ONE Group of Nevada. The professionals at Realty ONE Group understand how to stage a home for sale.