- Be clear about why you’re buying a home. Every large decision you have to make about home ownership should somewhat tie in to this. I can’t stress this enough. Make sure the reason makes sense to you after you and your SO (if applicable) sleep over it a few times. Don’t get in to home ownership because your friends or colleagues are telling you how much they love owning their home. It might not be the same for you. Again, be clear. I’d say literally write it down.
- If you’re buying a home together with your SO (I’d imagine most might), sit separately with different pieces of paper and write down what each of you wants in your home. Be realistic. Indicate what you’re ok with compromising on and what is absolutely a must have (or must not have). Don’t talk to each other while doing this. Once you’re satisfied with the list, tally what you have and combine what you want, don’t want, what’s a must have and what you can compromise on. Be realistic.
- Use one of the online tools to calculate “how much house can I afford”. Don’t spend more than 30-40% of your annual income on home ownership – this includes your mortgage, insurance, property tax etc. I’d say stick to 30% or less. Edit: 30% of take home pay is what my max was. I ended up buying lower than that. Your scenario may be different. The COL in your area will probably affect this number.
- Look at houses based on the life style you have not the life style you aspire to have. For example we looked at houses with smaller yards or yards without large lawns. Reason: Our lifestyle and gardening aren’t compatible. We’d have loved a large green lawn but realistically we’d never maintain it and probably wouldn’t spend on a gardener. That’s just one example. Don’t dream of building a home theater in the basement if you’re the outgoing type.
- “Buy the biggest house you can afford” is horrible horrible advice. This was given to me by most people around me. It sounded bad then and after a year in, it sounds just horrible. Buy the house that you need today with some consideration for tomorrow’s needs. Tomorrow’s needs is something along the lines of growing family NOT anticipating profits from business or promotions. The advice given on this sub holds true here too – buy below your means.
- Avoid borrowing money from friends or family in order to afford a bigger home. This is kind of an off shoot of the point above. Both points will just lead to additional stress that you don’t need. This is true even if they’re willingly offering you money without you asking.
- REALLY look in to total cost of home ownership. If you’re looking in to a fixer upper things can get very tricky. I’d recommend not going for a fixer upper for a first time home owner. I bought a relatively new home but the cost of minor fixes baffled me. I’m very very happy to not have bought a home that needed repairs. I’d have underestimated the cost even if someone would have given me quotes for the repairs. Things like regulations change. A minor change might end up with large expenses to keep up with code. I learned this the hard way when I wanted to get an additional power outlet.
- Drive around the neighborhoods that you’re interested in. Get a feel of the place. Chat with people who’re out for walks or something and see what they think. This might lead to interesting results. When I did this, people thought I was selling something so their immediate reaction to my “Hi” was “I’m good. thanks.”. :|
- A home purchase is often a process of elimination. Start with all homes that match your criteria. Filter based on cost, then filter based on neighborhood, then filter based on square footage, school districts etc. Keep going until you’re left with a few homes that you’ll go look at.
- Your agent facilitates the transaction. If you don’t know what you want and haven’t communicated with them very clearly, they may influence your decision. If you feel your agent is pressing you into making decisions – RUN. Better than having buyers remorse after having gotten in large debt.
- Feel free to use your agent to do the ground work. I gave my agent a list of questions to go figure out for the houses/neighborhood/HOAs etc that I was interested in. You’re paying your agent a good sum of money. Get your money’s worth. Don’t shy away from asking questions. (Your agent might tell you that you won’t pay him. That’s partly true. You won’t pay them directly – the seller usually accounts for this and prices the home accordingly. So in a way, you are paying him.)
- It’s in your best interest to not have the same agent as the seller.
- Don’t skimp out on the essentials – for example home inspection. It may be expensive to do but it’s better than being stuck with a flawed house. Edit: /u/SureWtever: consider getting a radon inspection (Quick google tells me there are DIY kits that are available).
- Protect your investment – get good insurance. Make sure you’re aware of what’s covered and what’s not. Change the locks before you move in. Change the lock on the mailbox. Invest in a home security system if your neighborhood warrants it. Consider cameras at the very least.
- Find out how the HOA is if it exists. I’ve heard horror stories from colleagues. A couple of them have sold their condos because of the stress it caused them.
- Consider your mortgage options. Depending on how long you plan to live in your home, ARM might be a good option.
- After you buy your home, don’t feel compelled to set it up immediately. That means it’s ok to use the current furniture you have. It’s ok to not have a proper bed. (We’re still using a box + mattress combo – no frame or headboard). It’s ok if one or more of your rooms look spartan for a year or two.
Mortgage type as in ARM vs Fixed? It will be very difficult to compare ARM and fixed past the reset date…. you’d have to assume a worst and best case scenario. The ARM will have a cap, but one thing’s for sure is that “rates”, in general, aren’t going lower. So, count on the ARM rate continuing to increase in the future and at every reset thereafter.
Getting a Mortgage with an ARM
I’ve never had an ARM but I believe the whole idea is to get in on the “teaser” rate (the initial rates for ARMS are typically lower) and refinance or sell before the reset date. The horizon for that is usually 3-7 years. For example Amerisave is offering a 30yr fixed @ 3.25 w/ 3.6 pts but also a 5 year ARM @ 2% w/ 3.25 pts. Typical cap is 2% so it may be @ yr 5 your rate goes to 4%, then to 6% on yr 6, etc. The lifetime cap is 5% so your rate would top out @ 7% (or it could go lower, but I wouldn’t bet on that.
Will an ARM mortgage be cheaper?
The ARM will no doubt be cheaper in the first 5 years – similar pts but much lower rate – but after that, I’d say it’s very likely to cost more, and the rate can shoot up pretty quickly, erasing your savings from the first 3-7 years. This is what stuck so many people in the housing bubble – they got in on ARMS with the intention to refi or sell before the reset, then values plummeted, and no lender would touch them for a refi (typically underwater), so they were stuck when the rates shot up.
What are FHA mortgage loans?
FHA loans are more targeted to those with poor credit and little to no down payment.
Every borrowers scenario is truly unique and the options do change quite regularly with the introduction of new loan products, however, the more recent new loan products are conventional products directed towards making home ownership more possible to those who may not have qualified prior.
The reason you find little on Piggy backs (a 1st and 2nd) or Jumbo is due to those products being very specialized to the specific lender and falling outside of Conventional of HUD/FHA guidelines.
In respect to being a bit off the desired 20% down payment, depending on how far off, structuring the purchase with a seller’s concession towards closing costs and preapaid expenses (i.e. escrows) may get you closer to achieving that 20% down payment; but if not, there are still options, especially for those with excellent credit scores.
How much does a house down payment need to be?
In respect to down payments lower than 20% the two most common options are:
a) conventional loan with monthly Mortgage Insurance
b) conventional loan with Lender Paid Mortgage Insurance (LPMI)
You should weigh these two options against each other and see which works best for you. Think of down payment in terms of 5% increments (5%, 10%, 15%, 20%, etc) as pricing adjustments for both rate and Mortgage Insurance premiums are based on Loan To Value (i.e. 80%, 85%, 90%, 95%) and credit score.
In addition, for those making this comparison of loans with less than 20% down, there are wholesale conduits that provide reduced conventional MI premiums for credit 740+ so a mortgage broker may be able to direct your loan to that conduit for additional savings. (FHA loan products are a whole other option for less than 20% down and possible credit issues, but I am not touching on that here.)
Does it make sense to house if you intend to move every few years? Has anyone ever told you: “Since you never see rent money again, buying a house is usually the better financial decision.”
Most people do not think about the consequences of when you’re buying a home for a short time (less than 4 years). Just like rent, there is a lot of money going out the door when you own a home that you’ll never see again.
Is owning a home a good investment?
Traditionally, owning a home is pitched as a good investment, because you build equity in the home by paying off the mortgage principal. True statement. But consider all the rest of the money you have to shell out along the way to do that:
- Mortgage interest (this is usually the largest piece of the pie, especially early in the mortgage)
- Property taxes
- Home owner’s insurance (HOI)
- Flood insurance
- Mortgage insurance (if your downpayment was less than 20%)
- Condo or HOA fees (for those types of communities)
- Realtor/lawyer fees when selling (and sometimes buying)
- Closing costs (buying and selling)
Renting versus buying a home costs
In some cases, these can total to be more than what it would cost you to rent a similar place, especially over a short time horizon (less than 4 years). The reason for this is because the interest on the mortgage is the greatest amount when the principal of the mortgage is still high (i.e., early in the mortgage).
Taking a completely arbitrary example (but using realistic numbers), let’s say you can afford a $250K home, you have $25K (10%) to put on the downpayment, with a 30-year fixed rate mortgage at 4.50%. The property tax rate in your area is 2.00%.
If you put that info into a mortgage calculator, it will say your mortgage payment is $1140/month (which includes the interest on the mortgage, plus your principal payment). “Sweet!” you say, because that’s pretty affordable for a $250K home. But wait.
- Property tax = $4500/year = $375/mo
- HOI = $87.50/mo (Source: Zillow, $35/mo per $100K of home value)
- Flood insurance = cost can vary from $0 to a LOT (over $100/mo)
- Mortgage insurance = $93.75/mo (assuming 0.5% of borrowed amount of $225K)
- Maintenance/repairs = $2500/year = $208/mo (based on 1% of home’s value to use or save toward repairs)
How much you might spend on realtors, lawyers, and condo fees is completely dependent on the situation, and I won’t swag those numbers here. Hopefully I’m able to make my point without them—just keep those costs in mind if they apply to your situation.
Now, if you total all of that up, what you get is: $1904 and change per month to own. Plus, you’re building equity in the home! All the better. But if you take a closer look at that mortgage payment of $1140, there’s something important. How much interest are you paying versus principal in that $1140?
You can’t quantify this as a set number, because it changes every month. When you make a payment, part of the principal is reduced, so the interest on the principal is less the next month. But you can average it out over set periods of time.
In this example, with your very first $1140 payment you pay $844 in interest and $296 towards equity. Over the first year, you will have made $13,680 in total mortgage payments; $10,050 of that will have been purely interest on the loan. Only $3630 will have been equity in your home. After 4 years, the numbers are $54,720 total, of which $39,170 is interest and $15,550 is equity. In that 4 year span of time, the average amount you paid in mortgage interest per month was $816 ($39,170 divided by 48 months).
So, the final analysis has to be: once I tally all the money that goes out the door when I buy, is it more or less than what I can rent (which is also money out the door)? In this example:
- 816 (average mortgage interest over 4 years) +
- 375 (taxes) +
- 87.50 (HOI) +
- 93.75 (PMI) +
- 208 (repairs fund) +
- Any “other” costs (lawyer, realtor, condo, flood insurance, etc.)
Total = $1580, plus “other” costs. (Yes, I acknowledge some will say $200/mo for repairs is a lot, but you have to budget for repairs somehow, and a good rule of thumb is 1% of the value of the home per year.)
If you can rent a place that fits your needs for $1580 or less, you’re doing better renting the place than you would if you bought the $250K house in this example. You can invest/save what equity you would be building, plus you don’t take on the risk of owning the home (depreciation, unforeseen costs).
Yes, you never see your rent money again, but there’s a ton of money when you own a home that you never see again either. You need to make sure the dead money when owning is less than the dead money when renting. The NYT will help you do the math.
Other Reasons to Buy a Home Instead of Renting
I think the issue isn’t that there’s no reason to buy, it’s that a lot of people are under the delusion that you should buy because it’s inherently better financially and renting is somehow not as financially responsible. If you’re buying a house because you want to own a house, rather than because you think you’ll have more money if you own a house, then sure, do it for your own reasons.
Some people may, on the other hand, feel like there’s more value in having a landlord or management company deal with maintenance and emergency repairs for you, having a predictable monthly rent without worrying about surprise fluctuations when you have to deal with house trouble, and the ability to move much more easily. As you said, there are pros and cons to both. But financially, they’re on the whole equivalent, just different. People shouldn’t be pushed away from renting and into buying when they don’t actually prefer to own a house, out of a mistaken belief that that’s the financially better thing to do.
Thinking of a Home as an Investment is a Bad Idea
Thinking of taking a mortgage out on a home (that you plan to live in) as an investment is a very misguided approach to investing. For example, many people buy a more expensive home than they can afford because they see it as a good investment. They can no longer afford to adequately save for retirement, but they believe that their mortgage payments on their house will make up for it. If they take out a 30 year, $250,000 mortgage at 4% APR, they end up paying $429,673 (1,193 monthly) by the maturity of the mortgage. Let’s say the house appreciates in value by 20% over that time and is now worth $300,000, the “investment” you made in your house has yielded you -1.19% annually over that 30 year period. Now let’s say that they decided to instead put those monthly payments into their retirement averaging that same 4% that the mortgage cost you. By the end of the 30 years the value in your retirement would be $828,000. That “investment” that they thought was sound is only worth $300,000 as opposed $828,000 if they would have invested their money and received a modest return.
Theoretically, an investment in a tangible object, such as a house or gold, really only protects you from inflation. Houses have been appreciating in recent years for a couple of reasons. 1.) The low interest rates as a result of the dot.com bubble and the 2008 crisis have made taking out a mortgage much more appealing, thus increasing the demand. 2.) When real estate prices, it actually raises the demand for houses in some cases. People assume that the price will continue to rise and they will be able to make a profit. This same principle works inversely as well. If housing prices are decling, people become less likely to purchase a home for fear that it will continue to decrease in value. We have seen both ways in the past 15 years.
What are Fixed rate mortgages?
With a fixed rate mortgage the interest rate, and therefore the monthly payments (principal + interest), remain the same. Common fixed rate mortgage terms are 15, 20, and 30 years.
Longer terms equate to higher interest rates. While a shorter term means a lower rate, the monthly payments are higher to compensate. One strategy is to take out a 30-year mortgage at a higher interest rate, but to make extra payments to reduce the total amount of interest paid over the life of the mortgage.
What are Adjustable rate mortgages?
Adjustable rate mortgages (ARMs) usually have a low initial fixed rate for a short time period before the rate is adjusted each year after the fixed period is over. For example, a 5/1 ARM is a mortgage that has a 5 year fixed rate period, and then adjusts annually.
ARMs offer significant risk, as the jump in monthly payments can be extreme depending on what the interest rate is tied to. ARMs may come with a wide range of options depending on the lender. Some have limits on how much the interest rate can increase during a given adjustment, some adjust with a different frequency than every year, and some offer longer fixed rate periods before adjusting.
ARMs can be particularly advantageous if a homebuyer plans to sell the property before the end of the fixed rate period.
What are Interest-only mortgages?
With an interest-only mortgage a borrower only pays the interest due for a certain period of time, before starting principal + interest payments.
The obvious disadvantage of an interest-only mortgage is the borrower builds no equity in their property for the period they are only paying interest. When the interest-only period ends, monthly payments are necessarily higher than they otherwise would be because the borrower hasn’t been paying down the principal. Finally, most interest-only mortgages have an adjustable rate component to them.
What are Piggyback mortgages?
In a piggyback mortgage a lender extends a traditional mortgage as well as what’s effectively an advance home equity line of credit – a second loan against the value of the property that the borrower also has to pay back.
This “piggyback” loan is usually at HELOC rates (higher than a normal mortgage) and has to be paid back concurrently with the traditional mortgage. The purpose of the piggyback loan is to reduce the cash required for a down payment on a property.
Frequently asked questions on Housing
Isn’t renting just throwing away money every month? Or, What are the real costs of owning?
- The main advantage to renting is that it requires much less capital and offers much greater flexibility if you want to change your housing situation. If the math works out in favor of owning (and it doesn’t always work out that way), these are the two features you’re paying for with your rent.
- There are many factors to consider when evaluating whether owning might be more expensive than renting:
- Property Tax – if you itemize, this is deductible, but you’ll never see the money again. This is already factored into rent.
- Mortgage Interest – if you itemize, this is deductible, but you’ll never see the money again.
- Mortgage Principle/Home Equity – this is money that you are saving in your house instead of investing in the market. Home values have a different risk/return curve than equities, but not necessarily a better one.
- Utilities – Even if utilities aren’t included in rent, most people buy a larger home if they own than if they rent, so utilities can be higher. They are also higher per square foot for free-standing houses than for apartment buildings. Some apartment complexes also have reduced Cable and Internet prices, or better service. Renters also may not pay specifically for water, sewer, trash removal, and snow/lawn services.
- HOA fees may apply to owners.
- Maintenance – If you own, you pay to fix things instead of the landlord paying.
- Obviously, home-ownership has many subjective benefits, and is not a purely financial decision.
What do mortgage lenders look for when getting a mortgage?
Potential lenders look at your housing expense-to-income ratio. Your mortgage payment as a percentage of your gross monthly income should generally be under 28%. Potential lenders also look at your total monthly payments relative to your gross monthly income. That calculation will factor in your other debts and must generally be under 36%. Finally, how much home you can afford will be largely based on the size of your down payment. Most lenders require at least 20% of the appraised value as a down payment to avoid private mortgage insurance (PMI) that adds to your monthly expense.
Essentially, how much does it cost to buy a house and get settled. Below are some common hidden costs of buying a house:
- Down Payment: Ideally 20%, but not required to be this high (NOT FROM YOUR EMERGENCY FUND!!!)
- Closing Costs: Varies with bank, could be flat rate but most commonly 2-5%
- Home Inspection: Varies with property. Basic is $500 +/- $200. Extensive can be in the $1000-1500 range
- PMI: If down payment < 20%
- Real estate attorney
- Escrow (Any estimates from people? Percentage? Flat rate?)
- Origination fee on a loan: 0.5 – 2.0%
- Increasing your emergency fund: If your monthly expenses are increasing
- Property Taxes
- Home Insurance
- Flood Insurance (If located in a flood plain)
- 1-3% annual maintenance
- HOA Fees
- Utilities: Paying for utilities that were previously covered by a landlord. Differences in heating/cooling a larger space
- Utility hookup fees (if applicable)
- Trash service
Cash due at closing is a function of three things:
1) Down Payment 2) 3rd Party Costs (appraisal fee, title work, state/county fees, Life of Loan tax, Flood Determination Fee, etc) 3) Prepaid taxes and insurance for ESCROW (1 year HOI and possibly 6-8 months of taxes based on your area and the time of year you purchase).
No lender/bank has control of the 3rd party fees or Prepaids. Obviously, the down payment is up to the borrower.
The only difference between banks/lenders is price of discount points for your rate and origination. All lenders are going to be within 1/8 to a 1/4 percent difference on discount points and most will work with you on Origination charges if you show them a loan estimate from a competitor.
- Moving costs: Truck rental, boxes, pizza and beer for the people you suckered into helping you move, etc.
- Furnishing the home: Varies with size of house and current furniture
- Appliances (May or may not need to buy)
- Yard equipment: Mower, shovels, rakes, etc.
- Landscaping (Varies wildly)
- Immediate renovations/upgrades: Painting supplies AND paint if you are painting
- The little things everybody forgets: Toilet plungers, trash cans, cleaning supplies, etc.
- Tools (If applicable, varies from person to person)
- Take-out budget: Some spare cash for eating out before you unpack your kitchenware
- Broken things: Spare cash to replace items that are damaged in the move. Accidents happen.
- Replacing locks: $40/door
- Utilities : water, gas, electric, phone, cable, etc.”
Other Items Requiring an Initial Investment
Initial investments into things you may not consider until you move in. I figured I’d list these, since most of the major, more common ones are listed.
- Lawn Mower, Snow Blower, Snow Shovel, Salt, Fertilizer, Rakes, Shovels, Gardening Tools, Tools.
- Furnace filters
- Trash Service
- Anything currently covered by your rent (internet/tv/power/heat/repairs), since a house will be bigger and doesn’t share walls, AC and Heat bills will go up
- Longer driving distances since you are moving out of town.
- Major repairs, the WILL be needed, such as heater, ac, washer/dryer, fridge, oven, microwave, garbage disposal etc. etc.
- Silly, minor things, they will add up! A plunger here, a garden hose there and a bottle drain-o somewhere else. That right there alone might add up to $25 – 50, there will be tons of this kind of stuff.
What do home inspections tell you?
Inspections do not tell you about behind-the-wall problems. When I went to have something small fixed about a gas appliance install, it quickly ballooned into $2500 or so when the gas lines failed the pressure test abysmally and every joint in the house had to be tightened. The inspection also didn’t tell me the sump pumps were sending water into the sanitary sewer (illegal) instead of into the back yard. That was, at least, a cheap fix thanks to my father in law having apprenticed as a plumber before switching to electrician (and he said he wouldn’t follow his father into the trades!).
Buying a house is probably the greatest venture the vast majority will make in their lives. Getting a house and mortgage is often one of the biggest purchases that most people will ever make. The procedure of discovering, purchasing, and paying for a home can seem mountainous for first time home buyer. Getting a first mortgage is also a big undertaking. It’s hard to know where to begin – what does a home loan involve? What are the best mortgage options? What are your choices? What preparatory steps are required? This article explains some of the major aspects of getting a mortgage for your first home purchase .
What to do with your first mortgage
Our friends at American Capital Mortgage Group have assembled an infographic that is a “Home Loan 101” for first time homebuyers. It addresses usual questions and concerns you may have when starting out on purchasing a new home and getting a first mortgage. First mortgage planning does not need to be difficult and can make buying your first home a success.
First Mortgage Financial Plan
Before you start, you’ll want to verify you’re fiscally prepared to purchase a home. What amount of would you be able to afford on a monthly basis. How long you plan to stay in this home, etc. These are great things to ask yourself when considering your new home purchase. Many people suggest that you do not spend more than 3X your annual income on home payments. This is just a guideline and it may be more reasonable to spend more or less on a first home in different cities.
It’s key to have good credit on the off chance that you need to be sanction for a home advance, so keep paying your bills on time in everything if conceivable. Moreover, you’ll have to have enough to put down a starting initial installment (this expense is ordinarily somewhere around 5 and 20% of the deal cost; if under 20%, you have to pay contract protection).
In the event that you need assistance scouting out the ideal home for yourself, it’s advised that you utilize a dependable real estate agent. As you can see in the home loan infographic, 88% of purchasers buy their home through a realtor agent.
Most importantly with your first mortgage planning, figure out your budget, what you can afford each month. Find out the property tax rate in your are a (from the tax assessor a website, do not believe what you read on Zillow or any other site like that. As they are almost always wrong). Figure out mortgage insurance, homeowners insurance, etc. consider all this when budgeting. This is how you decide how much you can afford, not the bank
Types of Home Loans: First Mortgage Planning
One of the toughest jobs in getting home load is choosing between all of the products available. Different mortgage types have many different advantages and benefits depending on your situation; so, you will want to consult a lender to figure out a plan of action. You will want to find the best fit for your needs based on credit, income, the price of the house, if you are military, etc.
Purchasing your first house can be an intimidating experience; however, it really doesn’t have to be. Do your research and break things into smaller, more manageable steps and you will be able to worry less about the process and focus on enjoying your new home!
Prepay Home Loan
Your payments on a fixed-rate loan are fixed at a given monthly amount. The percentage of any payment going to interest is determined by the amount of principal at the time, so if you prepay principal via additional payments over the required monthly amount, the interest due is thereby smaller and each payment can have a higher proportion of principal payment. The effect will be small initially but if you make significant prepayments as you describe here, your payments will soon be almost all principal and you will pay off the loan quickly and pay less interest as a result.
If you get a 15 year loan vs. a 30 year loan, you should get a lower interest rate. You can prepay either loan on the same schedule, but you will pay less interest if the rate is lower. If you intended to pay over 30 years, given interest rates right now it would be a horrible idea to get into a 5/1. But given you want to pay off in 5 or less, even if something comes up and it takes you a bit more than 5, you should still come out far ahead of a traditional fixed rate loan.
First Mortgage Planning Meeting with Bank
If you’re already educated about personal finance the “initial meeting to discuss affordability” is kind of BS (in my opinion). They will ask you how much you earn, what your debts are, are there bad marks on your credit. One of the banks I went to asked scripted questions like “why is now the right time to buy a house” and “where do you see yourself in five years” that I found really condescending and none of their business. I think the idea is that some people are just not in a financial position to buy a house and this meeting allows the bank employee to tactfully tell the person that. It’s totally informational and has no bearing on whether you’ll get pre-approved for the mortgage.
All banks in my area allow you to skip the meeting and just apply online for a pre approval. Also, they all have websites that tell what interest rate they offer and give a breakdown of what they charge for closing costs.
Other Tips for Planning for a First Mortgage
You want to know about all of the costs associated with the loan, including which closing agent and service companies the mortgage originator recommends. You can sometimes get better prices on mandatory services if you shop around.
In terms of the mortgage itself, you want to know when the rate would be locked, so you know they are not doing a teaser rate that somehow disappears when you need it most. You also want to be sure you understand whether any signing fees (aka points) are associated with a given interest rate, to allow a fair comparison.
Don’t be afraid to shop around. Getting quotes from a few different mortgage lenders is essential for first time mortgage planning and will allow you to compare the interest rates and costs/fees that each lender is offering. Good luck in your home search! Buying a home is a very exciting process.