First time homebuyer advice

[Anonymous]

Looking for some insight about buying our first home. 

My wife and I have worked hard to get to the point where we are ready to begin the process of purchasing our first home:

FICO scores in the mid 700's

DTI very low

No negatives on our reports (reflected in the scores)

Verifiable income and steady jobs for years

We were pre-qualified for roughly $850,000, but we know that isn't necessarily what we will be pre-approved for.  My questions are these:

Should we consult with a lender or a real estate agent first?  I've read conflicting advice.

Is there anything that we are missing?  Any secret/hidden obstacles that we haven't thought about or that seem to come up that new homebuyers don't think about?

I appreciate any and all advice.  Our plan is to begin the process next week.

[SomewhereIn505]

The best advice I have seen here is to interview multiple sources - a bank, a mortgage lender company, and a mortgage broker to see whom is the most professional, best fit to your needs, and whom you just click with. I have figured out if I can relate well with the LO and Realtor, then it’s less stressful for me. 

With that said, I actually researched lenders and then approached a senior management team member for a LO recommendation. So far, it’s worked well for me but I also have some baddies (student loans) which are difficult to work with. Finding a lender whom didn’t beat around the bush and said they could approve me with my issues was key for me. The LO is a mortgage broker so he could shop around on my behalf.  

Sounds like you don’t have those issues so it should be easier for you. 

[Anonymous]

I found my own home around age 21. I think too many people try to stretch what they can borrow.

Thinking like ~ "Oh yea, we can squeeze out a $1200 monthly payment"

Our home is nothing spectacular but it has good condition siding, roof, and interior AND we have FUN money.  Since I was so young when I made that purchase my salary has increased while my house payment has remained relatively steady.

I took into consideration the school district (thinking of future kids one day) and the general cost of living for the area. I found my home on my own and contacted the realtor expressing interest. I had to sign some documentation for the home and they tried to sneak in some verbiage stating that THEY would be my realtor and I would not consult with any other, I caught that and made them take that out. Realtor's although they can be knowledgable are out to make money just like the rest of us. Keep that in mind.

I am not necessarily someone that sets the best example but my monthly home loan payment with insurance included is currently about 19% of my monthly take home pay. When I first secured the loan (lower annual salary) my home loan took about 38% of my monthly take home pay.

I also had a significant down payment. How much do you have prepared to hand over for the down payment?

[Anonymous]

Maybe some bias here but typically you'll start by finding your lender and getting pre-approved.  It sounds like you have a pre-qualification so have you already started working with a lender?

When you find a real estate agent without a pre-approval they are likely to send you over to their preferred lender before showing you homes.

[JVille]

Do you already know who you want to use for a Realtor? These days it seems everyone (friends, family, neighbors) are buying and selling and you should listen carefully to their experiences. They may be raving about a lender or RE Agent who they love, one who saved the deal or want to kill! This is an excellent way to pick up a great name or two and a good place to start your investigation.

Not all lenders are created equal (or Realtors either for that matter) that’s why those personal recommendations are so valuable. My preference is a Mortgage Broker because they have more flexibility in multiple lenders and products offered, Plus they process your file “in house” and there is less craziness.
After 30 in the lending business I learned a few things,
1 - lenders lie and are often incompetent.
2 - Big banks are the worst (think Chase, WF, B of A, etc) and I worked for a couple of them.
3 - if it sounds to good to be true, it is.
4 - 99% of the time Internet lenders ( well read #3) don’t do it.
5 - the cheapest lender is rarely the lender you should pick. You need someone who knows what they are doing and can get the transaction closed. (Read # 3)
6 - Realtors have Favorite Lenders for a reason, those are the lenders they trust to get the job done and they have seen incompetence kill transactions many times.

Pick a lender you are comfortable with and then get prequalified with them. Final advice when processing the loan is to give them what ever they ask for no matter how stupid it sounds, never mind you gave it to them 2 times already. Keep your patience and good humor. Even the best loan process is enough to piss you off!