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When to start shopping for loans?

We put an offer on a short sale home that has 2 loans and 1 judgement lien. The 1st bank and judgement lien have approved the sale, but we are still waiting for the 2nd bank to approve the short sale. According to the listing agent, they have agreed in saying and we should get the approval in a week.

Questions --
> Should we wait to get the complete approval, open escrow and shop for loans or should we start shopping for loans right now? Is shopping for loans even possible without being in a contract?
> Should we shop with banks or mortgage brokers? Who can offer the best rates? Any recommendations?

Facts --
> Credit score is 760+
> We have been pre-approved by 2 major banks.
> The sale price would be $830k and we are planning 20%-25% down (we want to be within high conforming range loan <= $625k) with a monthly payment around $3k.

Thanks!
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December 09 2011 - North San Jose
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Answers (9)

Thank you Ray. I always appreciate a compliment from a fellow MLO. Especially, from a "straight-shooter" like yourself.

Happy funding, Rudi
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December 09 2011
Well put, Rudi.
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December 09 2011
You do not need to do anymore shopping around. You have two lenders that have taken their time to issue you a pre-approval letter. Rates are extremely close, regardless whom you choose. Although, the service you receive may vary. Currently, rates for a 30-year fixed rate loan on your loan amount of $625,500, your principal and interest payment is right were you want to be. 

Short sales may take months to close. The timing for locking your rate is important. The typical cost for a rate lock extension is about 0.03% a day, which amounts to about $187.65 a day on your loan amount. You want to close before your rate lock expires to avoid these additional fees. .... Best wishes.

Happy funding, Rudi
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December 09 2011
You should at least know when you're going to close to lock in rates and which lender you're choosing.  Right now, most experts are recommending to float rates for loans closing in 30+ days so I would not be too concerned about a huge rate change.  That and the fluctuation in rates on a daily basis has been very narrow for the past five weeks.  Of course, things can always change, but I recommend just searching for a good professional to work with who understands what's going on in the bond market.   

If you would have said you were going to be in your home for NO MORE than 10 years, I would have recommended considering and comparing an ARM with a 30-year fixed.  And even then, if you believe that your home would be a future viable rental property, I would advise considering a 30-year fixed. 

These are good questions to ask and ones you should pose to the professional you choose to work with.  

Good luck!
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December 09 2011
You do need to have a full purchase contract to lock in the rate.  When it comes to programs you will have options.  That should be a part of your discussion; do not just consider one if the option was not given.  You are the driver of this loan.

Thank you,

Geofrey M Merino
Lending in all 50 states
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December 09 2011
Profile picture for pdawgg
Thanks for your answers.

Do I need to be in contract to lock the rates?

Also, we plan to live there for at least 10 years, not sure which is better 30-yr fixed or ARM.
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December 09 2011

Hi,

I think that going through the process and having a complete approval is the way to go.  That is the least of your worries when purchasing a home is having to wait for a commitment from the bank.  At this point all anyone can do is give you a pre-approval.  However, FB is different and will provide you a commitment.

I have worked in both worlds, first as a broker and at the time we would work with over 30 to 40 lenders but now who knows how many lenders brokers can go to.  Now I work for a bank that Lends in all 50 states and we are one of the banks that has a wholesale channel for brokers to send in loans.

I do not totally agree with brokers having access to the best rates.  It is a combination of things from customer service to knowledge.  Click on my profile to reach out to me if you need further assistance.

Thank you,

Geofrey M Merino
Lending in all 50 states

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December 09 2011
It's never too early to start researching loans, but keep in mind that rates change many times a day. You'll want to compare loan products - ensuring that you compare the same kinds of loans (i.e. 30 year fixeds with 30 year fixeds, ARMS with ARMS) so you make sure your data is correct.

Also, try a variety of types of lenders - large banks, small banks, credit unions, mortgage brokers - to make sure you're getting the best deal.

In short, best start educating yourself now, but know that until you can lock them in, rates will continue to change constantly.
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December 09 2011
If you have already been pre-approved by two major banks, then you should not be too concerned with qualifying for this purchase.  

Shopping for loans is possible without being in contract.  The banks, lenders and brokers on Zillow only need the numbers you've provided and a zip code in the county where you're considering purchasing in order to give you a quote.  

It's free to shop on Zillow for a lender and a quote.  It can only help if you start early.  This way, you can carefully consider who you're going to work with without being under any time constraints.  

I recommend Googling the person, their company and talking to them on the phone or even in person, if possible.  

I'm partial to brokers for having the best rates since I am one and since we have nearly 100 different lenders to work with and at wholesale prices.  Either way, when you submit your scenario on Zillow, you'll get a mix of all lending options available and will be able to see who has a mix of the best prices and best reviews.  

Good luck!
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December 09 2011
 
Related Questions
When to start shopping for loans?
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Latest answer by Rudi Hofmann
December 09 2011 | 9 answers
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