Shopping for Real Estate LoansHere are some things to bear in mind when you're out shopping for real estate loans:
1. Shop for rates in a 14-day period
Every time a lender checks your credit, it goes into your credit report. Multiple inquiries can reduce your credit score. But according to FICO, multiple inquiries made within a 14-day period will only count as one inquiry. Bear this in mind when shopping for rates.
2. It's not ALL about rates
Interest rates fluctuate daily so the lender quoting you the best rates today may not have the best rates tomorrow. We strongly feel that while rates are important, finding a competent and honest loan agent or lender is just as important.
So while you are shopping for the best rates, keep in mind that you are also shopping for someone you can trust and is ethical. An incompetent lender will ultimately be unable to deliver on their promises and will cost the borrower more in the long run.
3. Get preapproved not prequalified
When you are prequalified, it basically means that the lender "thinks" that they can lend you this much based on the information YOU have provided them. The lender does not do any background checks at this stage. When you are preapproved, it means that the lender has checked your credit report and credit score, verified your pay stubs, bank statements, etc. and based on all those information, they have decided that you will indeed qualify for the loan amount you desire. In a strong sellers market, you will most definitely need a preapproval letter prior to making the offer.
4. One size does not fit all! Ok, so you decided that you're ready to buy a house. You tell some of your friends and family and suddenly, everyone is an expert on the subject and you're getting loan advice left and right! Just remember that when it comes to real estate loans, one size does not fit all! What works for your friends and family may not work for you.
For example, if you are young and single, chances are you will move within 5-7 years and a 30-year fixed mortgage is not necessary. Or if you are self-employed and own your own business, your options are much different from those who are employees and get W-2s every year. Research your options and the best loan for YOU based on your situation and needs.All the Fresno Real Estate articles were adapted and reprinted with permission from Empire Real Estate Group, Inc.