A dear friend of mine and first-time homebuyer asked me a question the other day that took me a bit by surprise. It dawned on me that this is probably a very common question for first-time homebuyers, so I thought I'd share it here. My friend and her fiancée are currently looking for a house and have been doing their own research. When she first came to me for guidance, as I do with all my clients, I told her to get pre-qualified before she started looking for properties. I also suggested that she shop at least three mortgage brokers or banks. Being the intelligent and mindful person she is, my friend called and got pre-qualified. Yay! Time to start looking at properties! Then, the question came: If the mortgage broker can't give us an exact interest rate at this point and they told us how much we can borrow, what are we shopping around for? Valid question. Here was my response:

Yes, none of us can predict the future and mortgage brokers won't lock in your rate until you've shown them a signed contract. So, the interest rate that you discuss during the pre-qualification process is really just a rough idea of what you'll actually get for your mortgage. You're not really shopping rates at the time of pre-qual. Instead, you're shopping for three key points: rapport, limits, and programs. I suggest you talk to a few different people to simply see if you like working with them. A home purchase is one of the largest decisions and investments you'll make in your life, so be sure that you're comfortable with the team that is helping you get there. You're also shopping to see how much each entity will let you borrow. As I tell all my clients, go into the pre-qual with a monthly mortgage payment number in mind that you're comfortable with--and stick to it. You might get qualified for more than that number on the first try, but sometimes you need to look elsewhere to find a broker/bank that will allow for a higher loan amount. Finally, you're shopping to see what programs the brokers offer to you. This matters most when you qualify for a "niche" loan program, such as the Good Neighbor Next Door program, which is specifically geared toward law enforcement, firefighters, teachers, and EMTs. Some brokers have more knowledge than others about certain programs. You want to find a broker who knows the programs well enough to offer the best program for you and one who has experience with it.

If you get pre-qualified with the first mortgage broker or bank you go to, you certainly can stay with that person/entity for your home loan. All I suggest is that you take the time while you have it--before you've got a contract signed and the clock starts ticking--to perform due diligence and shop around. Be honest with them and tell them that you're looking, but not ready to commit yet, and they'll respect that. You have a right to look out for your own best interest. Looking for the best option ahead of time will make the process run smoother once it's time to commit to a loan. Go ahead, get some recommendations and make a few phone calls. You'll be glad you did. Happy shopping!