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Exploring loan choices

Find the right home

You can explore your loan choices and shop for homes at the same time.

Once you’ve learned about the available options, met with multiple lenders, received a preapproval letter, and selected the kind of loan that’s right for you, there’s not much more to do in the mortgage process – until you find a home you want to purchase.

What to do now

Remember your budget and priorities

As you shop for homes, you’re likely to encounter homes that you like that stretch your budget. Be careful not to fall in love with a home that’s more than your budget can handle.

Consider working with a real estate agent

Many people work with a real estate agent to shop for homes.

  • Choose an agent who has strong experience with your preferred neighborhoods, price range, type of home, and other factors that are important to you.
  • Real estate websites can also help you find a home or connect you with an agent. Keep in mind many of these websites make money through advertisements from agents.
  • Ask the agent you’re considering for references. Also check your state’s licensing agency (sometimes called the Department of Real Estate) to see if there are disciplinary actions on the agent’s record.
  • Many homebuyers feel an obligation to work with a family member or friend who is a real estate agent. Remember that buying a home is one of the most important investments you’ll make. You need to work with an agent who has the experience to do the best job, which may or may not be your family member or friend.

Know who your real estate agent represents

Real estate agents can represent the buyer or the seller, and sometimes both. State laws can require your real estate agent to tell you who they are representing and under what terms. Ask questions. Find out, for example, whether your agent keeps your conversations confidential and how they are compensated. How would the agent or brokerage company handle the situation if you find a home you like, and the agent or brokerage company also represents the seller of that home?

Research and contact closing service providers

Closing on a home involves a lot of third-party services. You can usually choose the provider for some of these servicers, and borrowers who choose their own providers often save money. But when you find the right home, things start to move fast. Now is a good time to begin researching providers for closing services such as title insurance and settlement agents. Settlement agents, including attorneys, who are independent from the other real estate professionals involved might offer you lower costs as well as objective advice along the way. Look ahead to learn more about closing services and how to shop for them.

What to know

You can make a plan for contingencies

It’s a good idea to make your purchase offer and sales contract contingent on obtaining financing and contingent on a satisfactory inspection. That way, if you’re unable to get a loan, or if the inspection turns up serious flaws in the home, you’re not contractually required to buy the home.

Additional considerations for a new construction home

If you are considering purchasing a home that is not yet built, your builder could ask for an upfront builder deposit, also called earnest money. Before committing, ask the homebuilder under what conditions the builder deposit can be returned. Homebuilders often have an associated mortgage lender they work with. You don’t have to use that lender, and you have the right to shop around for a better deal.

How to avoid pitfalls

Consider getting an informal insurance estimate before committing to a house

For a house in a high-risk area, insurance could be difficult to find. Or, it might cost more than you expect. Many online tools help you get a quick sense of potential insurance costs.

Ask questions to find out if a property has previously flooded or been damaged

If a home has been hit by a natural disaster, it could happen again. Some states, but not all, require home sellers to disclose past damage, so pay attention and ask questions. When you look at the home, be alert for signs of improper repair—although some damage is invisible. Frequent damage from storms could increase insurance costs or decrease the home’s value.

Visit our sources page to learn more about the facts and numbers we reference.

The process and forms described on this page reflect mortgage regulations that apply to most mortgages.