So you've decided to buy a home. What is the first thing you should do? Surprisingly, the answer is not to have your local Realtor drive you all over town looking at homes. One of the very first things you should do is talk to a lender.

Talking with a lender before you ever start looking at homes accomplishes a number of things. First, it will tell you how much of a loan you can qualify for. It is important that the information you provide the lender is accurate, because when you actually apply for a loan, all of your financial information will be verified. Second, based upon the information provided, your lender will be able to tell you how likely it will be that you qualify for a loan. Third, if your lender tells you how much of a loan you might qualify for, and you know how much down payment you have, you will then have a good idea of how much of a home you can afford to buy. Knowing that, you can then focus your buying efforts on homes in your price range. It will save you and your Realtor a lot of time. Loan pre-qualification might put you in a stronger negotiating position when you put in an offer, but if you can get pre-approved for a loan, that is even better. Pre-approval means that your lender has approved you for a loan, and basically you are just trying to locate a property to buy. Your loan pre-approval means financing is one less thing the seller will have to worry about in terms of closing the sale.

Where do you go to obtain a loan? The obvious place to start would be with banks and savings and loans that are active in your area. Talk with the bank that holds your checking or savings account. If you are a member of a credit union, see if they make home purchase loans. Try and meet with a mortgage broker or mortgage banker. They represent a number of lenders, so they might be able to do some of the shopping around for you. Your Realtor probably works with a number of lending institutions and brokers, so be sure to ask who he/she recommends.

Each lender has slightly different loan products available. Interest rates may vary, loan fees may be higher or lower, terms may be shorter or longer. The most important thing to do is shop around. Choose the loan that fits your needs the best, get yourself pre-approved, or at least pre-qualified, then go out and find the home of your dreams.

The material presented here is for informational purposes only and should not be interpreted as tax, legal, or investment advice. Individual cases are all different, so this information should be used only in conjunction with the appropriate professional advice.