Once upon a time… mortgage lenders made all the decisions. In the “olden days” of real estate, buying a home involved a limited choice of financing. There were only three basic mortgages available: VA, FHA, or Conventional – period.
Each mortgage program had its own requirements for down-payment, interest, and qualifying guidelines. Loans were 30 years at a fixed rate of interest. If you met the requirements, you got the loan. If not… well… you get the picture. Lenders set the rules, and you had few choices or alternatives.
There were disappointments too. Buyers would begin looking at homes, pick one out, sign a purchase contract, and only then apply for a mortgage. After credit reports, employment verification, and plenty of anxious waiting, buyers were informed that they didn’t “qualify” under the lenders’ rules.
Today, things are much different. For those planning to buy a home, the mortgage application is the first step, not the last. By applying first, and disclosing all financial information up front, the lender is able to select a loan program for which the buyer qualifies. The lender tailors the final loan package to fit the buyers’ requirements – resulting in an up-front approval. With a loan approval in place, buyers can then begin their home search, confident in the final outcome.