You can use a mortgage broker and let the broker do that for you, or you can go online and fill out a form and have a deluge of calls/ads/letters for eternity.

Start with the financial institutions with whom you have a relationship (bank, credit union, broker).

Thanks. At what point in the process is any of those options done? Before or after you make an offer?

What does your agent say?

Hi. I think she said once you're under contract. I suppose that means after you make an offer and they accept your offer? But it was a phone call with a lot of information, so I'm wondering if I misunderstood or misremembered. Because at this link at the Consumer Financial Protection Bureau: https://www.consumerfinance.gov/owning-a-home/process/explore/

it says "Once you have a basic idea of what kind or kinds of loans you’d like to consider, it’s time to start talking with lenders. Contact several different lenders — it’s helpful to get to know a few different loan officers." Which makes it sound like you do this before you even make an offer.

Also, I'm pretty sure my real estate agent said that you have to decide basically what kind of loan - conventional, FHA, VA - you intend to use before you place an offer, and then all the quotes you get are for that type of loan. Or rather, part of the seller's acceptance is conditional on the type of loan you stated you would have when you placed the offer, which I can understand. But we are eligible for all of those types of loans (with some caveats). And in order to know which loan is best for us, I think I'd have to know the exact numbers for everything. But if I can't know those numbers until I've already made a commitment, how do I really choose what's best?

I guess it was just unintuitive to me that you have to make an offer on a house, and be under contract for it, before you can actually know what you would be paying in total monthly for it. Which you only know once you get the quotes, right? So I figured I must be misunderstanding something.

Oh, okay. I was aware that at some point I needed more than a pre-approval. That was actually my question, when that point was. Didn't realize too that this general "when" question was something that varied by location, such that "a bunch of strangers" couldn't know; all questions on this forum are posed to a bunch of strangers. But I see you are saying that this 'when' question is not a stable general process question, but that it varies by location and perhaps other specifics that I don't know about yet. And that I should seek in-person clarification, rather than making this an online discussion.

Okay, won't bother you gracious folks again. Thanks for your helpful words!

Lots of RE practices and norms vary from state to state and even in parts of the state. Your agent needs to write an offer that is based on the loan that you intend to get. Your loan officer needs to coach you in the best loan for the type/price range/down payment of house you want. Clarify with the lender, then relay what loan you need to your agent in order to write the offer. The lender can't do a lock on the rate until you are father along in the process, as in having an offer in place.

Mwedzi, here's the process and, in this form, it should not vary by state.

1 get pre-approved.

2 find a house, make an offer. Hope the offer includes a clause to cover you actually getting a mortgage and that it includes some number of days within which you have to apply for the mortgage.

3 the offer is accepted by the seller. Your pre-approval should have been shared with the seller.

4 apply for the actual mortgage. The clock is ticking to correspond to the number of days in 3 above. There will be an actual cost for the mortgage application and an actual mortgage is on a specific house. That's why you need an accepted offer on a house. You can either use a mortgage broker or apply yourself directly with the lender.

5 you will be notified at some point between the application and, hopefully, well before closing that you were approved.

When you were pre-approved the lender should have discussed various loan options with you. This would allow you to make an offer knowing what kind of loan you would be using and include it in the offer. In one state I lived in, it was typical to include an interest rate percentage in the offer, e.g. "receive a 15 year loan with an interest rate not to exceed X%" In another state, it wasn't spelled out as completely. Offers just indicated loan type (FHA, VA, USDA, conventional) and the down payment %age.

I'm a Realtor and I work very closely with the buyers' lender.

You have your pre-approval in hand when we are shopping for a suitable home. There are parameters to the pre-approval. The rate is X%, the loan is 30 years (as an example), the taxes don't exceed $Y/yr and the insurance and HOA are below $X in order to meet your pre-approval. Naturally the LO has had all of your paperwork (W-2's, tax returns, paystubs and any other documentation) prior to the issuance of the pre-approval or the pre-approval isn't worth anything.

However when we find the house and before you ever make an offer, we verify with the LO that those expenses it (property taxes, homeowners insurance, HOA payment - if any) and your P&I all meet with your goal. The LO provides a worksheet detailing closing costs & pre-paids and the monthly payment so you are completely informed before making the offer. If you need a sellers contribution we know what you need prior to making the offer. This is the safest way to make an offer.

Edit: In my area, you can have two similar homes side by side and end up with two entirely different payments due to property taxes and homeowners insurance. Different by a large amount. That's why we check each time to make sure the payment is what the buyer thinks it will be before making the offer so there are no surprises.

In our case it was always after our offer was accepted. One other thought is that you should talk to your agent about which banks are preferred in the area. Here, if you submit an offer with your pre-approval from certain large banks, you are almost guaranteed NOT to get your offer accepted (very much a seller’s market and often multiple bids). I’d ask your agent which banks they LIKE to work with to be sure your offer isn’t hindered by your choice of lender.

Agree with Kris_MA about the banks. In our area too, if you submit your pre-approval from Chase, Wells Fargo or BOA you are almost guaranteed to NOT get your offer accepted. Short answer is because these big box banks have changed the way they provide pre-approvals and it is very likely that the loan will be denied at some point in the process, including the last minute just before closing. Sellers don't want to sign a contract with a lender that has a 40% denial rate after the pre-approval.

The reason the paperwork is submitted to the lender up front at the time of pre-approval is because it gives the lender accurate info so the consumer gets the right mortgage.

Edit: And if there are any issues, they are spotted and corrected right in the beginning, before there is an offer on the table and time becomes an issue.

Are we talking about "pre-qualification" or "pre-approval?"

One bank just sent me a pre-qualification, a second said it's meaningless, so don't bother and the third says they're working on a pre-approval.

And at what point do I know that the seller has no objection to the lender?

Also, when do I see the complete mortgage agreement to check on all the fees and charges?

I can pay cash if I have to, so that's always an option at the last moment.

^As the buyer, you get to choose your lender and the seller has no say. Having said that, if the lender has a bad reputation in the area, the seller is not obligated to accept your offer. Naturally, since you can pay cash, you can overcome this aspect.

A pre-qualification without documentation to the lender is worthless. By documentation I mean whatever the lender needs to issue your loan (bank statements, W-2's, tax returns etc). Once you have provided all the documentation it really is a pre-approval. [If the buyer is risky they are better off going through the underwriting process right up front before looking for homes that way it is only subject to the property and appraisal.] Naturally you aren't in that boat at all worthy.

The lender is obligated to provide to you a Loan Estimate that details the fees within 3 days of your loan application. This is typically done after you have a contract but right in the beginning of your loan processing. Ask the lender for a detailed loan worksheet prior to your offer so you can see the itemized expenses. Here is the loan estimate form and its constraints https://www.consumerfinance.gov/owning-a-home/loan-estimate/ 

Check various lenders. I have found the big box banks to be the worst now for originating mortgages except if you are getting a jumbo loan. The best sources are non-bank mortgage lenders - all they do is mortgage origination and funding all day long. IME they have the lowest rates and fees and perform quickly (30 day closing is normal, can close more quickly).

Very useful! (Here's the New link though.)

I am a first-time US property buyer. (I've only sold inherited US property.)

So pardon my ignorance.
The CFPB example posits a $162,000 loan and shows $8,054 in closing costs, almost 5%. Is this typical? So, for example, if the mortgage were for $800,000, closing costs could be $40,000?

Are there any costs or charges, no matter how they characterize them, that might still applied even though they are not in this form?

The example provided by the CFPB is not indicative of actual costs - just example of the form. The lower the mortgage amount the higher the closing costs as a percentage. If you are getting an $800k mortgage, you are in jumbo loan territory and the percentage of your closing costs should be much lower. The costs not included on the CFPB form include small one time things - not a lot, but typically inspection fees and transaction fees (if any) charged by your Realtor's broker. The other fees are included on the form. Ask your agent and your lender if there are any other fees that aren't included - shouldn't be, but there may be regional differences.

Ask your lender for a worksheet which should be all the same costs in a easier to read format so you know what your fees will be upfront before you make an offer or before you apply. Once you apply to the lender, they must send you the loan estimate within 3 days. I like to know the fees before applying :)

Jmc101- says

"Mwedzi, here's the process and, in this form, it should not vary by state."

Rather than state to state, this often comes down to market by market, in the same city. In my city, for example, there are neighborhoods that you can take the traditional approach, and sellers will entertain the offer. There are also a bunch of other ones (mine, for sure) where a house goes for sale and you better be ready with cash OR an iron-clad "yes" from a reputable lender. Even with the latter, you're still at a competitive disadvantage, unless you can offer what the cash buyer often does- crazy quick closings. 10 days, even less.

I'm watching that happen today with my neighbor's property. Went live last night at $425K for a tear down, 6,000 square foot lot. Today, 3 offers already for much more than that, all with cash and short close days. My Realtor thought I might be interested, as we have a partner we build with from time to time. Caught me flat-footed, though, and this will be a done deal by the end of the day.