The thing with shopping for a home loan, versus shopping for a home and then going with whatever the seller offers as sales vehicle, is that when you shop for a home loan, you are dealing directly with financial institutions whose sole purpose is to make money off your loan. When you go with the sellers bank or institution, however, you’re dealing with an entity who wants to make money off you by selling you a home, and then by making money off your loan. There’s a big difference because when a seller is working with the loan company, they may have things going on between them that you may not be aware of either until it’s too late or until you have a lawyer look into things for you which can become rather expensive. Thus, the first tip is, don’t go with the institution that the seller is working with; instead, find one on your own before you even start house-hunting.
The next tip is one that is more work driven than practical; and it is, before you start shopping for a home loan, educate yourself on how the whole process works. Consider how big of a deal it is to buy a house. Doing so will change your life; regardless of whether it’s your first or last, buying a house is a big deal, and it’s a big deal in several ways. The first is because you will cease living where you live now, and begin living in this new place. That’s a big deal for everyone.
The next reason it’s a big deal is because buying and selling houses is usually the biggest financial transactions most people will ever make.
Another reason after that is, because you need to know which kind of loan would be best for you and which will cost the most or the least and how the terms work, and what happens in the event of unforeseen circumstances. You might also want to know if there is a good chance your loan will be sold to someone else. Before you buy a house, you need to very clearly understand what different terms mean, and the impact they could have on you and your family now and in the future. You need to understand the conditions under which your terms can change and who is able to make that call and when and why. And above all, you need to understand variable rate mortgages and balloon payments, because it’s these two things that are responsible for more home foreclosures than anything else.
In short, do your homework, don’t be one of those people that goes into buying a home with their eyes closed and expecting sellers or bankers to look out for them. Learn how loans work, then figure out how much you can really afford, and only then should you start looking for your house.