This is almost the "What came first..." question.
Do you put your home on the market and find another one first or make sure your financing is in order? Do you wait until your Adjustable Rate Mortgage is ready to convert to a higher rate to refinance or make sure your financing is in order first?
All too often I get a phone call or email indicating that it is time to get a borrower pre-approved because an offer has been accepted, or someone has an ARM that will adjust in a month or two and they want to start shopping for a new loan.
In most cases this is not a problem and we are able to move ahead quickly. We are able to find a competitive rate and product and consummate the deal. But usually with a little work we can improve the situation and save thousands of dollars IF we have the opportunity to spend the time necessary to improve the situation. Even if you have great credit, there can still be issues with the transaction that prevent you from getting the best rates.
One of the most important things to remember is that lenders have guidelines that they rarely deviate from. A good mortgage consultant will guide you through the loan maze and make sure that everything is in order.
If there are errors on the credit report it can take 2-8 weeks to get the changes corrected. If there are employment or income issues these can take up to 1-2 years to correct. If downpayments or reserves are needed it can take up to 2 months to see them become "seasoned". These can be worked around with different loans and lenders,. But if they can be easily resolved with the luxury of time, why should you be penalized by a higher rate or a riskier loan program.
While in most cases any loan officer can get you a loan today, the good ones will take a look at your situation and the time available, and make recommendations on how to improve your situation to make you a stronger borrower. This can save you tens of thousands of dollars over the lifetime of your loan.
Back to my question, I believe that you should have your situation reviewed annually regardless of whether or not you are currently in the market for a loan. You never know when your situation might change.
If you have over $25,000 of consumer debt at 14%+ interest rate and are only able to make the minimum payment you should immediately speak with a mortgage consultant who can show you how much you can save over time. For instance, for Oregon home loans borrowers are often able to save many thousands of dollars over time just by consolidating their debt. That is a huge impact!
If you know that you will be purchasing a home, you should talk to a good mortgage professional 3-4 months before you start looking.
If you are going to be selling your home you should talk to a mortgage professional several months BEFORE a realtor. Our job is to make it easier for you to get into your next home and loan, and it might take a few more months than you or your realtor are prepared to wait. But it could save you a bundle and a lot of headaches.
If your current loan is going to adjust soon, I believe that 5-6 months is a good time to start the process, especially if there was a reason for being in a short-term loan.
If you are looking at a lease-option to buy, you should be talking at least 1 year in advance.
The sooner that you can get a clear picture of your financial situation the better chance that you will be a strong borrower and get the best rates available. But, it's your money... My job isn't to tell you what to do, just to make work what you bring me...
Useful resources:
Best Loan Rates Online.com - Best Loan Rates Online is your #1 source for articles that matter when it comes to loans.
