SAN ANTONIO – The search for a new home is a long one, especially if you’re a first-time home buyer. With San Antonio’s increasing population, and after another record year for home sales in 2019, real estate is expected to continue to grow steadily in 2020.
Once you have gathered all the necessary information you need for the loan application process (Click here for part one of our homebuying series), you are now ready to start exploring mortgage loan options.
The Consumer Financial Protection Bureau has some tips so that you can make an informed decision.
First, you need to learn about loan costs. There’s more to loans than just the interest rate and the monthly payment. The CFPB says mortgages are complex, and getting a better deal in one part of a mortgage often means paying more elsewhere, such as higher closing costs.
You should also understand the different types of loans that are available. Depending on your financial circumstances, you may want a 15-year loan with a fixed interest rate or a 30-year loan with an adjustable rate.
When you have a basic idea of what kinds of loans you want to consider, the CFPB says the next step is to start talking with lenders. You should contact several lenders, who may offer different options. You can ask questions with more detail to get a more definite sense of which loan will work best for you.
It’s also good time to gather and update your paperwork to make sure everything is good to go for your loan. You should ask lenders if there are any additional documents you may need.
The CFPB says when in doubt, gather the paperwork anyway. You should put everything in your loan application packet to make sure you have it when you apply for your mortgage loan.
The next step is to get a pre-qualification or pre-approval letter, which is a document from a lender that states that it is tentatively willing to lend you up to a certain amount. However, this is not a guaranteed loan offer just yet.
The CFPB says the pre-approval letter lets the seller know that you will likely be able to get financing. You usually need this letter before a seller accepts your offer on the house.
Finally, it’s time for you to select the loan that fits your needs. The bureau says choosing what kind of loan you want now will let you apply for the same type of loan with each lender you are considering. This will help you compare the offers you get.
For more information from the Consumer Financial Protection Bureau on exploring loan options, click here.
WATCH ALL PARTS OF THE “MONEY: IT’S PERSONAL” HOME BUYING SERIES BELOW:
Part 1: What to do before you make an offer on a home
Part 2: Tips on exploring mortgage loans to purchase a new home
Part 3: How to compare mortgage loan offers
Part 4: Tips for navigating the closing process when buying a new home
