News And Information From By Whaley & Associates

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How To Shop for a Home Loan

One of the first steps in the homebuying process is gaining pre-approval for a mortgage loan. This gives you a realistic idea of the home prices that you can afford and allows you to make a strong offer when you do find the right house. While there are a lot of factors that impact your loan approval and the interest rates that lenders will offer, there are a few steps you can take to make sure that you’re getting the best home loan and mortgage rate.

A look at mortgage rates

As of mid-September of 2022, the average national mortgage rate for a 30-year fixed rate loan broke 6 percent for the first time since 2008. We’re seeing the continued effects of inflation on the housing market, with mortgage rates and prices rising throughout the nation. These higher rates and prices have begun to slow the housing frenzy, meaning more homes are now listed for sale. There were an estimated 1.31 million houses on the market at the end of July. However, according to NAR, determined homebuyers are still purchasing homes at an increased rate, mostly because buyers lock in a fixed monthly payment that is no longer susceptible to inflation like rent prices are.

Because of the stability that comes with homeownership, the average home only stays on the market for fourteen days. Units that are priced right, at least according to today’s standards of home prices, are attracting more potential buyers and receive an average of 2.8 offers. To help buyers standout in the market and meet this relatively quick turnaround, it’s more important than ever to get preapproved for a home loan. Lenders look at a variety of factors when determining if you qualify for a loan, including your credit score and the amount of your potential down payment. These factors can positively or negatively impact the mortgage rate and amount that you’re approved for, so before settling on one rate and lender, here are some important steps to take to find the right loan for you.

Don’t just look at the rates online

Most mortgage lenders list their current average rate on their website. But the key word here is average. This number does not reflect each borrower’s current financial situation, so you can’t know if that is the exact rate that you would get approved for if you applied to that lender. To know what rate you would get, you need to go through the preapproval application process. Lenders will look at your debts, assets, and income to determine what you can afford and offer a loan amount and interest rate that reflects your financial situation. To know which lenders to apply to, talk with your real estate agent, look at the loan types that lenders offer, and consider expanding your search to different banks, credit unions, and online lenders.

Apply to multiple lenders

Once you’re ready to start the preapproval application process, you’ll want to apply for loans through multiple lenders. It’s recommended that you apply to three to five different lenders to save the most money. According to Freddie Mac, for a home priced at $250,000, getting one additional rate quote can save an average of $1,500 over the life of the loan, with the number rising to $3,000 for comparing five lender options. These savings are dependent upon the price of the home, so for a house worth double that of the example, the savings would be doubled.

As a note, lenders do a hard credit pull when you apply for a loan, which can lower your credit score. However, when you apply for multiple lenders within a fifteen-to-thirty-day period, they’ll count as one single inquiry, so your score shouldn’t be dinged multiple times.

Compare loan estimates

After applying for a loan with multiple lenders, you’ll receive loan estimates from those lenders. This document will list the loan amount, interest rate, closing costs, lenders fees, and other important factors that will help you see exactly what they’re offering you as the borrower. You can compare rates and payments across the lenders to ultimately determine which one works the best for you. This is a good opportunity to ask the lenders to clarify anything that you’re uncertain of since it is a big decision that you don’t want to make lightly.

While it might take a little time to find the best mortgage loan and rate for you, weighing your options can help you save thousands of dollars on your loan.

Source

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Keller Williams Realty
License Number: #01417209
Office: (760) 473-8060

6005 Hidden Valley Rd.
Carlsbad,CA 92011

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Brad & Maya Whaley
Whaley & Associates
Bradley Whaley CA DRE# 01369165 & Y. Maya Whaley DRE# 01393491


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