For most first time homebuyers, their first question is: “Where do we go to pre-qualify if we apply for a loan?”
I always tell them the pros and cons of banks and that of working with a mortgage broker depending on their financial status and needs.
Small local banks only take applicants with very good credit scores, 5% down payment or more – that is conventional loans or reduced PMI (private mortgage insurance). These banks also service their own loan mortgages, and borrowers pay directly to the bank.
On the other hand, mortgage brokers are working with a group of lenders – banks and mortgage lenders. The one I know has about 30 lenders. Once the mortgage broker pulls your credit, he/she will find you a bank/mortgage lender who will give you a loan. Most first time homebuyers end up with this since they have a limited or small down payment, minimum of 3.5%, and a minimum 640 credit score – FHA loans.
When a first time homebuyer doesn’t have a Realtor to advise them, they search over the internet and call every bank. Each time these banks and lenders pull their credit, his/her credit score goes down.
If you are thinking of buying a house, please email or call me for more information on the process from mortgage pre-qualification to closing and even advise after moving in to your new house. My service doesn’t end at closing. I am your best resource in town.