The purchase of a home is likely the most significant financial decision most people will ever make, and finding the right lender for your home loan is just as important as finding the perfect home. A good lender could save you hundreds or even thousands of dollars in closing costs upfront as well as thousands of dollars over the life of the loan with the lowest interest rate possible. It really pays to do some research and shopping around.


Trim closing costs

Lenders will provide borrowers with what's called a "Good Faith Estimate." The GFE details the closing fees charged by a lender and their proposed interest rate. A wise borrower will get Good Faith Estimates from multiple lenders to determine who is offering the best all around deal. It is not necessary to have each lender pull your credit, however. Once you know your credit score, you can simply inform the lender of your score and ask for a Good Faith Estimate based on that score. You should request that the Good Faith Estimate be given assuming the same loan origination fee so that it will be easier to compare interest rates and closing costs accurately from one lender to the next. If you do not understand how to accurately compare GFE's, ask an experienced Austin Realtor for assistance.


Buy down the rate

If you have extra cash on hand and plan to remain in the home you purchase for a while, you may want to "buy down" the interest rate to lower the monthly payment. In exchange for an upfront fee, lenders are willing to lower the interest rate they charge thus cutting the borrower's payments. Buy downs can be temporary or they can last the life of the loan. The buyer can negotiate a buy down directly with his or her lender, but sometimes a home seller arranges the interest rate buy down as an incentive to attract potential buyers. If a buyer only plans to be in a home for a short period of time, a buy down may not make sense. An experienced mortgage professional can help determine if a buy down makes financial sense based on individual plans and circumstances.


Get pre-approved

To get pre-approved, a lender will pull a potential buyer's credit report, verify income, and take other underwriting steps to determine a maximum allowable loan amount for that buyer. The lender also commits in writing to making the loan if a purchase occurs within a set amount of time. Getting pre-approved also puts a buyer in the strongest possible bargaining position with sellers. Those who are in a hurry to move a property often will accept a lower bid from a pre-approved buyer because they can be reasonably certain the deal will go through.