Choosing a Lender

There are many types of lenders -- banks, credit unions, and mortgage brokers, to name a few. They each offer advantages and disadvantages, but they all have one thing in common -- a lot of fine print. Do yourself a favor -- let your buyer's broker help you choose the lender who is truly offering you the best deal.

Mortgage Application

After you choose a lender, you need to apply. This involves filling out an application form and paying an application fee and an appraisal fee.

The lender then reviews your application. They do a credit check. They verify your employment, salary and assets.

They'll also evaluate the property. This is known as an appraisal.

The Appraisal

The appraisal, like the CMA, is conducted by real estate professionals.

The appraiser determines value primarily through a cost analysis and a sales comparison. The cost analysis determines what it would cost to build a similar house. The sales comparison involves comparing the subject property to at least three similar ones -- "comps." These comps are properties:

(1) Similar in style, square footage, number of bedrooms and bathrooms, age and other characteristics;

(2) In close proximity to the subject property;

(3) That sold in the last six months.

The appraiser takes data from the comps and makes adjustments, as no two houses are exactly alike, in order to arrive at a final value estimate. This will determine the amount available for the mortgage.