Finding the Right Lender for You

As a Realtor, I constantly get calls from people wanting to own a home in the San Antonio/Fort Sam Houston, TX vicinity, but have no idea where to start. Their questions range from how much home they can afford and if so, how much they can qualify for. Here is the question you should really be asking when it comes to buying your Texas home: Can I afford NOT to buy one.  If you can afford to rent a house while during your assignment at Ft. Sam Houston, you can certainly afford to BUY one.  Remember, property owners do not rent their homes out for less than the payments, insurance, taxes and upkeep cost them.  They have to make a monthly profit on that property you are renting---the same profit, in the form of ever increasing home values, and could be putting that money in YOUR pocket, instead of theirs.  The only real problem in transitioning from renter to homeowner (sounds nice, doesn’t it?) is this:  Where do I get that kind of money to make it happen?

Last I checked, that “money tree” we all dream of popping up from the weeds never did sprout. That reality check brings us to the starting point of the home-buying process: getting pre-qualified and pre-approved for a home mortgage loan with a lender. Why start there? Shouldn’t I look at homes for sale first and THEN get a loan? As you can guess, my answer is a resounding “NO!” for several reasons. First and foremost, if no one is willing to lend you money, there’s not really much point in shopping for a house. It will save countless hours of searching for that perfect house along with the disappointment if you’re told you can’t qualify for that amount for various reasons. Also, most Realtors require a pre-approved amount so their time is not wasted, as well.  Remember, it’s not just what you think or say you can afford, the mortgage loan industry is highly regulated, and there are strict guidelines lenders have to adhere to when loaning money to purchase real estate. Numerous factors are taken into consideration, such as current income, debts, past credit history and overall appraised value of the property you wish to purchase. If in fact you can’t find anyone to lend you the money to buy a home, a good loan officer should be able to point you in the right direction to get your finances in order so that you can buy that home you’ve always wanted.  Next, the lender is typically the slowest aspect of the entire loan transaction, so it only makes sense to start with them.

Great, so where should you go to borrow money for this home loan.  You have two options in Texas: banks and mortgage brokers. They basically do the same thing except banks are generally loaning their own money and mortgage brokers are loaning the money of others.  Banks loan money to earn interest and while mortgage brokers earn a fee (interest passes to the entity that actually made the loan).  So, banks must be cheaper right?  Not always the case. Banks also charge loan related fees and in addition, sometimes higher fees and/or interest rates than the mortgage broker.  I recommend talking to two or three different lenders to compare fees and rates.  You will receive a “good faith estimate” from each one allowing you to compare interest rates, various fees and bottom line, your monthly payment. Ask your Realtor to recommend mortgage brokers she has successfully worked with in the past, as well as contacting your current financial institution where you have your checking and/or savings account. Be cautious of internet only lenders without thoroughly researching their credentials.