For the past few weeks we've been discussing financing. Last week we covered Selecting a Lender and Selecting a Loan. 

This week we want to talk about the next two steps in the process. 

Step 4) Shop! Compare! Negotiate!

In "Step 3) Selecting A Loan," we provided the Mortgage Shopping Worksheet so that you could compare the loans being offered by different lenders.

Now that you know about rates, points and fees, and different types of mortgages, we want to provide you with 2-calculators
•Which loan is better?
•Which lender has the better loan?

These will help you when you are using your work sheets to compare products and making your final decisions. Remember Mortgage Loans are a commodity! Use your "Worksheet and Questions" to make lenders and brokers compete with each other for your business. Let each lender know that you are shopping for the best deal.

You are the Buyer; the Lender wants your business Negotiate, Negotiate, Negotiate until you get to the best possible Rate and Terms.

Step 5. Loan Pre-Qualification & Pre Approval

In "Step 1) Determine How Much Can You Afford," we emphasized the need to meet with a loan officer and get a Pre-Qualification Letter listing an estimated amount that you qualify to borrow.This was based on your credit report and information you provided about your income and debt payments. Your qualification amount was based on this information, and the affordability calculator we provided.

Now that you have determined the Lender and the Type of Mortgage that you are going to use to finance your home purchase, it is time to go to the next level - Pre-Approval.

What's the difference? Pre-qualification is an estimate based upon your credit report and the income and debt information you provided. The Pre-Approval process now requires you to provide all the documentation required in a full Loan Application, and the lender will now verify all of that information. This Loan Application Checklist will help you have all the documentation the lender needs.

A Pre-approval Letter is a firmer commitment on behalf of the lender as to the amount they will loan you.

The lender has now done all the verification work required for a full approval except for a final repeat credit report, verification of income, the home purchase agreement, appraisal, title search, and finally underwriting.