If you’ve never bought a house before, the idea of getting a loan can be intimidating.  But it’s much simpler than you might think.  There are many types of loan programs available for different types of buyers, and the first step to finding a loan is to talk with a loan officer or loan broker.  A loan officer will work at a specific bank and can usually only offer that bank's loan products, while a loan broker has access to various loan programs from many banks and can offer you several options. 

How do you decide between using a loan officer and a loan broker?  Talk to a couple and compare rates.  You want to learn about the types of programs available.  Ask the officer or broker for a "Good Faith Estimate," which gives information about the type of loan and the fees associated with getting the loan.  You can use the Good Faith Estimate to shop for a loan by presenting different lenders with the Good Faith Estimate and find out if they have a better program available for you.

How do you find a loan officer or broker to talk to if you don’t know any? You can ask a trusted family member or friend for recommendation.  Even better, ask your Realtor, who will have worked with excellent lenders who keep up with changing loan landscape, for some recommendations.

Once you decide on a specific loan officer or loan broker, he or she will have you start the process of getting pre-approved by filling out a loan application.  Your credit will be run, and based on information you have provided, the loan officer or loan broker will figure out whether you can get a loan.  You will also find out what price home you can afford and what the estimated payments on your loan would be.

Important tip - Make sure you get pre-approved for a loan BEFORE you get too involved in looking for a home. You want to know that you can afford those dream homes you're looking at, and you want to be ready with a pre-approval so when you see the right home, you can make an offer. You'll need to present your pre-approval letter with your offer.

Pre-approvals have an expiration date, and given the turmoil in the mortgage market, it’s better to speak with your loan officer/broker frequently to make sure your pre-approved status hasn't changed. 

When you get pre-approved, you'll be told the interest rate on your loan.  Because interest rates change every day, it's important to remember that this interest rate is only good for that specific date.  You’re not guaranteed the interest rate until you "lock it in," which can only happen after you’ve made an offer on a home, the offer’s been accepted, and you have informed your loan officer or broker that you want to commit to the loan program and interest rate.

After your offer on a home has been accepted and you are “in escrow,” your loan officer or broker will ask for various documents, letters, and pieces of information that the loan underwriter needs in order to do a full approval of the loan.  Make sure you provide all information immediately, as escrow has very critical time deadlines and the timely closing of your house requires all information to be provided immediately. 

Once you receive your pre-approval letter, don't be surprised if you still need to give the loan officer/broker a few more pieces of information.  The loan approval process is just that – a process that moves along as your purchase moves along.  Make sure to be accessible throughout this time so you’ll be able to provide all the documents that are requested.

Before you close escrow, you’ll be scheduled to sign loan documents in front of a notary public.  The loan documents will then be sent back to the lender, who will send escrow the appropriate funds needed for the purchase.  At this point, you need to make sure that any money you have committed to bring in (down payment, closing costs) reaches escrow 3-5 days before escrow closes.

Once all money is received and all final conditions of the loan have been signed off, title will transfer to you and you will own your new home!  This has just been a basic overview, so if you have any questions, please feel free to ask me.  I can also get you in touch with a loan broker for any questions you have!