The way you approach mortgage shopping can literally save thousands of dollars. Take time to understand the system and make educated decisions.  Doing so may very well save you time and money

If I can explain any steps along the way, please ask. I'm always happy to help.

The steps to successful financing

Get pre-approved.  Don't skip this step.  Getting pre-approved is fast, easy and free.  A written pre-approval let you present the strongest offer when you find what you are looking for.  Once you know your price range, you won't waste time looking at homes you can't afford.

In a fast moving market, you want to be prepared.

Examine your finances.  How much can you afford to spend? While a lender will tell you how much you qualify for, it's up to you to figure how big a payment fits into your budget.  What monthly dollar amount do you feel comfortable committing to?  Remember to include a budget for insurance and taxes.

Consider what type of loan is best for you.   Compare fixed-rate with adjustable rate mortgages. Look down the road. Where will you be in 15 years, 30 years?  Pick a finance plan that fits in with your goals for the future.

Check your Credit Report.   A lender will run a credit report on you. This is important as it will give you the opportunity to clear up any inaccurate information that may affect your score.

Shop Around.   When you're ready to get a loan, explore your options.  Working with someone in your local area can be a big advantage. You can choose either a direct lender or a mortgage broker.

A direct lender has money to lend and makes the final decision on your loan. Brokers are intermediaries who choose from many lenders. A broker may be able to help find you a loan if you have special financing needs.

When shopping for a loan, also look for the best loan costs. These may include:

• Interest rates  
• Broker fees
• Points (each point is one percent of the amount you borrow)
• Prepayment penalties
• Loan term application fees
• Credit report fees
• Appraisal costs

Be aware.   Don't let hidden costs sneak up on you. Make sure you get a written estimate

Apply for a loan.  Gather all the documents you'll need to verify your loan application. This will include payroll information as well as bank statments and documentation for any other debts you may currently have. You'll need to provide tax returns.  Check with your lender or broker for more information.

Lock it down.   With interest rates changing daily, locking down your rate can prove a big money saver. A rate lock - in writing - guarantees you a certain rate and terms for a specified period of time. Lock in all the costs you can, including interest rates and points.  And try to set the lock at the time of application, not at approval. This will protect you from rising rates.

Your lock-in period should be long enough to allow for all processing time.  Most lock periods range from 15 to 60 days.  Make sure to check with your lender or broker about the average time it takes them to process a loan.

Ask about Pre-payment.   You can shave years off the length of your mortgage by restructuring the way you pay back your loan. Simply paying more frequently can save thousands in interest. So can making a lump payment toward the principle - or paying a little more each month. These methods are called pre-payment. 

Not all loans allow for pre-payment. If you want the option, discuss it with your lender or broker. Pre-payment fees can be substantial.

Clear up any financial problems.  Do you have credit problems or owe money to the IRS?  Buying a new home may still be a possiblity.  Contact a financial advisor or tax resolution service to find solutions.

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