Expert: Jim Root - 9/17/2008

Question
Hello Jim,
 My boyfriend and I are seriously thinking about buying soon. We will most likely be looking for a condo/townhouse, but also regular homes depending on the price. This will be the first time for both of us so I have a lot of questions. I won't ask you ALL of them here, but a few to start off with.
 What's the very first step we should take? We've already talked about our finances and what we think we can afford and looked at our credit and all that. I've heard that usually you want to try and get pre-approved for a loan first, before you start looking, which sounds like a good idea to me. How do you go about that? There are two banks we are considering going to to see what kind of deal we can get - do you just walk in and talk to a loan officer? Would we have to bring any specific information with us for them to figure out what kind of a loan we could get (pay stubs, tax returns, etc)?
 Would you recommend going with a mortgage broker? I can see the plus side of this being that they would do the searching for you to get the best loans...but I think my boyfriend is concerned with them coming back with loans from places he doesn't feel secure about. He'd feel better getting a loan from a reputable, "stable" bank, like Bank of America or Citizens, as opposed to a local bank or other smaller name. Any truth in that?
  Also, we are unmarried, so we would be going in on this house as two single people. How does that work with getting a loan? Would we be able to get a loan based on our combined resources or would we have to each get separate loans?
 Thanks for your time in trying to explain all this to a "newbie".

~Melanie


Answer
Hi MELANIE--

Now is an EXCELLENT time to BUY a Home--what with BOTH home values/prices AND mortgage interest rates at an all-tome LOW! One purchasing NOW and holding the property until the Real Estate Market recovers will build equity and profit on the resale later. In the meantime, you enjoy the advantages of ownership as opposed to renting!

I'll answer your LAST question first. Although unmarried, you can purchase a home together either as "joint tenants" or "tenants in common." these two forms of ownership are slightly different,. but both have the parties to the purchase holding either a "divided" or "undivided interest" in the Home. Most Mortgage Loan Programs will ALLOW for providing loans to unmarried couples for Home purchases.The unmarried couple can combine their income & debts, as well as other assets/liabilities and Credit Scores to gain approval for a Mortgage Loan! Actually, separate loans on the same property aren't possible!

What to do first? Getting the advice & guidance of a "Real Estate Pro" is a great way to go! You'll need BOTH a Realtor to act as your "Buyer's Agent assisting you with finding the right Home, negotiating Price/Terms with a Seller and working with your Lender, Appraiser & Title Company up to closing of the sale-- AND a Loan Officer to help you with the origination, processing and closing of your Mortgage.

Get Realtor & Loan Officer referrals from friends, family, co-workers, etc, who have purchased a Home in your Community. Get names of Realtors and Loan Officers that these folks have used and were happy with! Interview at least 3 Realtors & 3 Loan Officers to determine who you'd like working for you. Who's got the knowledge & experience needed to help a "First-Timer" through the Real Estate "maze?" Who do you feel COMFORTABLE  with? You need someone you can TRUST to handle these jobs! Ask the Loan Officer about Realtors he/she knows and works with; ask the Realtor where most of his/her Clients go for their Loans. A Realtor and Loan Officer who will work as a TEAM in your BEST INTERESTS is what you're looking for.

As for Mortgage Broker versus Mortgage Banker, it's "6-to-1, 1/2 a Dozen to the other!" Whether Broker or Banker isn't very important as both provide similar services, rates, terms and loan programs. More important is having a LOCAL Loan Officer that you can sit across a Desk from--I suggest shying away from the Internet Mortgage Loan Providers!

My recommendation to First/Time Homebuyers is for an FHA-Insured Mortgage Loan.It's easiest to qualify for, has best interest rates and limited fees, has fixed rate 15 and 30 year loans! When you contact a Loan Officer via phone to set up an appointment, he/she will tell you just what you need to bring with you--ie, Pay Stubs, Bank Statements, Tax Returns,etc!

Hope this helps get you started. Let me know how things work out for you! GOOD LUCK, Kids!

--JIM (real-t-pro@comcast.net)