3. How Shopping for a Mortgage Works

ShoppingWe use a simple road map to get you to the right home and mortgage. So, are you ready to get going? (Here, we’re going to assume you want a new home and mortgage. Later, we’ll give you a road map for other scenarios.)

1. When you get in the home-buying mood, slow down! Would it bother you if you threw away $50,000? You can do that on a $200,000 mortgage if you rush. That’s why before you begin looking for a new home or a new mortgage, we ask you to do your homework. We’ll show you how.

2. For instance, how much mortgage can you really afford? "Pre-approval" is a quick way to learn that magic number. A pre-approval is the most important step you’ll take, if you are a smart homebuyer. Why? When you’re pre-approved you know how much you can really afford to spend on the mortgage payment itself. And don’t think the phrases "I’m pre-approved" and "I can afford it" are interchangeable. They definitely aren’t. Many mortgage companies approve you for the absolute maximum mortgage payment your budget and your heart can take. But these folks don’t tell you that the new mortgage payment virtually always goes hand-in-hand with many other new expenses: improvements for your new home, new furniture, higher real estate taxes and homeowners insurance, for instance. We show you how to budget for all those expenses.

A big difference in applying for a pre-approval with us, and applying for a mortgage with other companies: Our credit union historically looks at you, not just at an impersonal, printed credit report. That’s particularly important in the mortgage world, where even a single late payment, or a job change, can impact your credit—and where some mortgage companies benefit from telling you your credit is worse than it is.

Find out more about our pre-approval process and its benefits at TCU.

3. As part of our pre-approval process, we’ll give you a great "heads up" on your credit in general. Some mortgage companies tell you your credit is bad when it isn’t—so they can raise rates on you. Other mortgage companies won’t give you straight answers about your credit. We’ll help you understand where you really stand—and that information is good, even if you don’t get a mortgage with us.

4. With pre-approval for a mortgage in-hand, you can shop for a home that meets your budget and your lifestyle. What qualities should you look for in a new home? Is using a buyer’s real estate agent a wise idea? Should you have the home inspected? The FoolProof Home Buying Guide can help you answer these and other questions.

5. We’ll help you decide which type of mortgage repayment plan is best for you. There are many types of loans and repayment plans available to you. Later in this guide we review the major types. But what’s important here is this fact: we’ll help you find the plan that is best for your budget, not the plan that simply makes us the most money.

6. We protect you in the closing process. Going to the moon in a homemade rocket is easier than understanding all the complexities and expenses involved with the closing process on a loan. That complexity can cost you money if you’re not careful. Our goal here is to make sure you understand each part of the loan-closing process, including the costs associated with "outside" fees, etc.

Next chapter: 4. Loan Lingo

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