There is one item nearly every home buyer needs before viewing a property they want to buy.
Itâ€™s a pre-approval letter.
Most real estate agents wonâ€™t take you inside a home without that piece of paper.
They require this so that they only show you properties that you can afford, and to see how serious you are about purchasing a home.
If you are not already pre-approved, or even if you are, the agent may strongly encourage you to work with his or her in-house mortgage lender -- the one that works from inside the agent's office.
Should you work with the recommended mortgage company? Does the agent have ulterior motives?
Maybe not, but it is good to be aware of how in-house lenders work and if you can get the best mortgage rates and service from these "preferred" mortgage providers.Click to see today's rates (Sep 23rd, 2017)
An in-house lender is simply one that sits in the real estate agentâ€™s office to field questions and offer loans to the agentsâ€™ clients.
The individual could work for any mortgage company that has struck a deal with the real estate company to have a presence inside the office.
There is nothing inherently wrong with lenders who share office space with real estate firms or who have a relationship with your agent.
In fact, there may be some advantages.
Having a lender and agent affiliation may be more convenient for you if you only have to communicate with one party. In addition, the following may be advantages for you.
If youâ€™re buying in a new condominium community, you may have to use the in-house lender. New condos often donâ€™t meet Fannie Mae or FHA condo guidelines, so a single mortgage lender will agree to lend there.
In this case, compare your loan rate and terms to market rates. It may not be worth paying a higher rate for a specific condo when there are other properties that do conform to standard lending rules.Click to see today's rates (Sep 23rd, 2017)
It may not be in your best interest to work with a lender that has such close ties to your agent.
Some agents choose their preferred lenders because they get deals closed quickly and reliably. Thatâ€™s also good for buyers, but the missing element in this equation is the loan cost.
The in-house lender may feel that they have you â€śbuttoned upâ€ť as a customer. They may feel they no competition for your business. That confidence typically doesnâ€™t prompt them to get you the best loan type, mortgage rate, and closing costs.
Maybe even more important, make sure the lending company offers the mortgage programs that suit you best.
Home buyers in rural and suburban areas should ask about the 100% financing USDA loan that is specially designed for moderate-income borrowers in less-dense areas.
Itâ€™s a good idea to shop around for rates and loan programs, even if you think you are getting solid value from your real estate companyâ€™s lender.Click to see today's rates (Sep 23rd, 2017)
Your agent could ask you to get pre-qualified or pre-approved with the in-house lender before home shopping. Itâ€™s okay to use this lender to get the initial pre-approval letter, even if you have no intention of using their services.
The additional credit check wonâ€™t hurt your credit score as long as you do all your mortgage shopping within a 14-day period.
Youâ€™re not obligated to finance your purchase with that lender, and no builder or seller can force you to use an in-house or preferred lender.
Even if youâ€™re getting â€śspecialâ€ť incentives for using an in-house lender, it pays to compare the offer with those from other lenders â€“ that deal might not be as â€śspecialâ€ť as you think.
Before applying for a home loan, let the preferred lender try to earn your business along with everyone else.
You can let them know when pre-qualifying you that you wonâ€™t decide on a lender until youâ€™ve had a chance to compare several loan quotes.
No real estate agent is going to care about saving money on your mortgage as much as you do. And mortgage rates can vary a great deal between competing lenders.
Consider the in-house lenderâ€™s quote just one of many that you will receive before making a decision.
Interest rates on home loans have hit multi-year lows recently. Shopping around can get you even lower rates than the average.
Get a quote today, especially if you need a pre-approval in a hurry. The process takes just minutes to get started, and all quotes come with your live credit scores.Click to see today's rates (Sep 23rd, 2017)
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
Katrina B. Lab Technician
I look forward to reading The Mortgage Reports. Its information and updates helped me to buy my first home. Thank you!
Thaddeus C. Systems Analyst
I am an aspiring homeowner and The Mortgage Reports helps me daily. Thank you for your excellent information.
Amit D. Research Scientist
The Mortgage Reports gave me valuable information, tips, and advice which helped me to acquire a home with the lowest mortgage interest rate. Keep up the good work!
2017 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)