Finding the best home loan can be tricky. There are a lot of options to choose from and each lender has its own process for approval.  However, there are some general guidelines that you should keep in mind before signing up for any loan.

The key to this process is to get pre-approved from your bank of choice.  Make sure that your financial decisions are not based solely on emotion.   How many poor decisions have you made based on how you feel?  Yah, me too.

Let’s get started.

Check the Banks in Your Area

Research lenders online before visiting lenders in person.   Although it may take some time, it may be worth meeting with several lenders before deciding on one to go with.  This way you can avoid the possibility of being offered a higher rate than initially expected.

The best way to decide is to find out what they offer and then decide who you want to work with.  A little research will give you an idea of how much lenders are willing to lend you, what their fees are, what kind of information they’ll have on your credit history and more.

Most of the research can be conducted online.  It’s also easier to compare rates this way before making a trip out of town for an in-person visit with a lender.

Shop Around for Current Interest Rates

The current interest rates on loans and mortgages are still at exceptionally low levels.  Shop around for current fixed interest rates and don’t consider any future adjustable-rate loan programs.  While you’re at it, have the lending institution sell you on their best program.

You may be able to get a loan with no down or little down payment. Interest rate and term of the loan go hand in hand.

Here’s a tip. Let me stress this one more time. Stay away from adjustable-rate mortgages. Those adjustable-rate mortgages are nightmares waiting to happen.

Get a Pre-Qualification Letter

The best place to get pre-approved for a home mortgage is with a bank or credit union that’s close to home and work. Once you’ve found your lender, you’ll need a pre-approval letter. This letter tells the home seller that you can more than likely buy their home.

To get the pre-approval letter, you will go through the approval process of the bank you selected.  Once you have been approved for a mortgage, you can start shopping around for a home. This is where life gets exciting. The letter usually spells out the max you can borrow as well.

Secure a Down Payment and Closing Costs from Family or Friends

By now you picked your dream home. However, you now need to gather up a down payment.  But how will you cover the down payment?   You can either do so with a loan from a bank or by getting family or friends to help you out.

A recent study showed that more than 50% of home buyers used money from their family for a down payment and closing costs on their property.  This is because many potential homebuyers don’t have enough savings to cover the cost of a down payment or to cover the cost of buying a house.

Congratulations. You are now a new homeowner. Well, we hope so.  That’s it. It’s a little work, but worth it. We wish you the best of luck.