What Questions Should I Ask a Lender Before Buying My First Home in Erie?

What questions should you ask a lender before buying your first home in Erie? Start with the ones that tell you what you can comfortably spend each month, which loan types fit your situation, and what could change before closing. A lender is the one who answers all of these for your own finances, so the goal of your first call is to leave understanding your numbers.

I'm Carol, and Homes by Carol is my real estate practice here in Erie. Carol Vanlandingham is a REALTOR® with eXp Realty in Erie, Colorado, helping people through life transitions, downsizing, first homes and relocation across Erie, Boulder County and Northern Colorado. I've been licensed for 10 years and have lived in this area for over 31 years. Before that I fixed and flipped houses, so I know how much a monthly payment shapes the way a home feels once you live in it.

First-time buyers often tell me, "I don't even know what I don't know." That's exactly where you should be on your first call. I'm not a lender, and I don't give lending advice. What I can do is help you walk into that conversation with a list, so nothing important gets skipped.

I ask every buyer to be pre-approved before we tour. A lender looks at your income, your savings and your credit, and then tells you what you can borrow. That does two things. It tells you what you can comfortably spend, and it tells a seller your offer is real.

It also saves you a hard moment. Falling for a home you can't buy is a painful way to learn your budget. Learning it first lets you shop with a clear head.

If you don't have a lender yet, I have a list of lenders I recommend. You're free to use anyone you choose, and you're welcome to talk with more than one.

Bring a notebook or use your phone. Ask for answers in plain words, and ask again if a term is new. A good lender is glad to explain.

Step 1: Ask what you can borrow and what you can comfortably spend

These are two different numbers. The first is the most a lender will lend. The second is the monthly payment that fits your life. Ask the lender to show you the payment at a few different prices, and then decide what feels right for you. You are the one who lives with the payment.

Step 2: Ask which loan types might fit you

There is more than one kind of home loan, and the right one depends on your income, your savings and your plans. Ask the lender to explain each option that could fit you, what it asks of you, and what it costs over time. Ask them to compare two side by side.

Step 3: Ask about down payment help

Your lender is also the right person to ask about any down payment help you may qualify for. Ask what programs exist, whether you qualify, and what the rules are. I don't try to answer this for you, because the answer depends on your own finances.

Step 4: Ask what the monthly payment will really include

The price of the home is only one piece. Ask the lender to explain what is inside the payment and what is not. If the home has an association, those dues belong in your budget. In some of Erie's newer neighborhoods there may also be a metro district charge. I wrote more about this in my article on choosing between a condo, a townhome and a house. Tell your lender which kind of home you are considering, and ask whether it changes anything.

Step 5: Ask what documents you will need

Ask for the full list at the start, so you can gather everything at once and not in pieces. Ask how you should send it and who to call with questions.

Step 6: Ask what could change before closing

This one surprises people. Ask the lender what could affect your approval between now and closing day, and what you should avoid doing in the meantime. Get the answer in writing if you can. Then you'll know before you make a big purchase or change anything about your accounts.

Step 7: Ask about locking your rate

Ask whether you can lock your rate, when it makes sense to do so, how long a lock lasts, and what it costs. Ask what happens if closing takes longer than expected.

Step 8: Ask for an estimate of the costs at closing

Ask the lender for a written estimate of what you will need at closing, beyond the down payment. Go through it line by line until each item makes sense. If something confuses you, that is a good reason to ask.

Bring them to me. We sit down for a first meeting, and I walk you through the whole buying process from start to finish. Then we look at what your budget buys in the towns you like, because prices and home styles vary from one place to the next. Sometimes that conversation changes the search area, and sometimes it changes the wish list. Either one is fine.

You can read how this fits into the bigger picture in my article on getting ready to buy your first home. When you find a home you love, I show you what similar homes nearby have sold for, and we put an offer together. My guide to making an offer as a first-time buyer explains that part.

These come up often, and each one is easy to avoid once you know about it.

• Touring before pre-approval. You may fall for a home that doesn't fit your budget.
• Treating the largest approval as the right budget. The most you can borrow is not always the amount that feels comfortable each month.
• Not asking about the whole payment. Association dues and district charges change the real monthly cost.
• Making a big purchase before closing. A new car or new credit card can change your approval. Ask your lender what to avoid.
• Staying quiet about a new word. If a term is unfamiliar, ask. No question is too basic.
• Waiting until you find a house to start. Starting early gives you time to fix anything that needs fixing and to decide without a clock running.

Do I need to talk to a lender before I talk to an agent?

You can do either one first. I'm glad to talk with you before you speak to a lender, and I'll explain the steps and share my list of lenders I recommend. I do ask every buyer to be pre-approved before we tour homes.

Can I talk to more than one lender?

Yes. You're free to use anyone you choose, and many buyers speak with more than one. Ask each lender the same questions so you can compare the answers fairly.

What if I don't understand something the lender says?

Ask them to say it another way, and ask to see it written down. A lender who explains patiently is a good sign. You can also bring the question to me, though the final answer about your loan comes from your lender.

Who explains down payment help?

Your lender does. They can tell you what programs exist and whether you qualify. I can help you know what to ask.

How early should I start?

As early as you like, even if buying is a year away. An early conversation gives you time to prepare and costs you nothing.

I listen before I advise, and I explain every step before you reach it. You can read more about how I work with first-time home buyers, or see the full path at How I Help You Buy a Home. If you would like to see where you might shop, visit my Erie page. Send me a note or call me at (303) 522-3130, and we'll go through your questions together.