Getting a mortgage can seem like a daunting task. There are a lot of terms thrown around and you may not be clear on the options you have. Knowing key facts about the lending process will assist you in making the right decision, potentially saving you thousands of dollars.
Pre-approved vs pre-underwritten
This is the first step in the process, but many people think that pre-approved and pre-underwritten are the same thing. A pre-approval relies on your credit report, pay stubs, and answers you give to some basic questions. It is provided by the loan officer and is not a deep look into your financials. In fact, it does not mean a whole lot because the person making the decision, the underwriter, has not yet evaluated your file.
Underwritten, on the other hand, means that someone approved your file way above the loan officer’s position in the process. When a loan is underwritten by the underwriter, you are approved to purchase the home. All the information needed has been compiled and analyzed, allowing you to know the exact amount of money you are able to borrow. There will be no last-minute surprises.
Big banks and credit unions vs local mortgage lenders
A lot of clients want to borrow through their big banks or credit unions, which is understandable as they have regular dealings with them. The large financial institutions like Wells Fargo, Bank of America, Navy Federal Credit Union, etc. all offer home loans. The problem is they offer many different financial products like boat loans, vehicle loans, checking accounts, business accounts, financial advising, etc. In trying to juggle the many different services, they are not capable of doing any specific task particularly well.
Using a local mortgage lender that just does home mortgages is the better option when looking to secure financing. They know the process thoroughly and will assist in avoiding any pitfalls that tend to pop up.
Do not use an online lender
Attractive offers from on-line lenders are everywhere and can look convenient. It is as easy as going to a website, like Quicken.com, putting in information, and receiving a pre-approval letter that is often time misconceiving since they are not pre-underwritten. Often, when buyers put a home under contract based on a pre-approval letter from an on-line resource, the home does not close due to financing issues. No one wants the deal to fall through a week before closing, it can be embarrassing and heartbreaking.
Real savings come by way of getting a second opinion from a local mortgage lender. You will see that in dealing with a financing professional directly will not only save you money but will provide peace of mind. If you can save even a quarter of a point on your loan it can save thousands of dollars over the term of the loan. The local mortgage professional focuses on one thing and they do it very well.
The Novack Team is happy to connect you with a lender that specializes on home loans. As always, we are here to assist and answer any questions you may have.