Finding the perfect mortgage lenderDate posted: 3/18/16 09:00:00 AM
After getting your credit score in shape and saving your down payment, it is time to start your search for the loan officer and lending firm that’s right for you.
Make a long list of lenders
Never settle when you are looking to apply for a home loan. You should compare several different lenders to ensure that not only you get the best rate, but that you also find the best broker for your situation.
Nerd Wallet suggested getting quotes from different mortgage lenders to compare savings. Some potential lending options to consider include:
- Credit unions
- Commercial banks
- Mortgage companies
When getting your quote, consider asking about purchasing points, also known as discount points, to lower the interest rate of the home loan. Purchasing points are fees you pay to your mortgage lender in exchange for a lower interest rate on your loan. This can save a great deal of money over the life of the loan.
“If you plan to be in your home for many years, ask your lender about buying down the mortgage rate,” said James Dowd, a San Francisco-based financial advisor and accountant, according to Nerd Wallet. “Even though you pay additional points up front to do so, you can save thousands of dollars in interest expense over the life of your loan.”
Know what costs to consider
There are quite a few financial factors to consider when applying for a home mortgage. According to Zillow, each individual has varying priorities when it comes to what part of the quote matters most. If this is your first home and you do not plan on making it your forever home, the quote on an adjustable-rate mortgage might be more important to you.
If you want lower up-front costs, finding a loan officer with low lender fees might be more appealing. Whatever your preferences, make sure the lender you choose matches your financial needs.
Money isn’t the only factor you should consider. You also want to ensure whoever you work with is an expert. Interview prospective brokers and lenders and inquire about qualifications and past experiences. In addition, ask for references to past clients so you can ask them about their experience with the lending firm.
You can also do background searches on mortgage companies prior to applying for a home loan with an operation. The Better Business Bureau is a great place to read unbiased reviews and gather additional information about any mortgage lender you are considering.
Ask around for referrals
If any of your family members, friends or coworkers recently purchased a home, ask these individuals about their experiences and whether they would recommend a specific mortgage company.
Bankrate also suggested reaching out to your real estate professional and asking if he or she has any recommendations.
“Good Realtors keep a short list of good lenders and do that not because of referral fees, which are illegal, but because they trust these loan officers to be fair and to get their loans to close on time,” said David Reed, a mortgage banker, according to Bankrate.
By taking in as many opinions and suggestions as possible, you can better ensure you choose the right mortgage lender.
Additional questions to ask
After reaching out to a lender, you’ll want to make a note if he or she takes awhile to get back to you. It’s best to work with a professional who is prompt, friendly and courteous. The initial response you get back from a lender can reveal quite a bit about how it will be to work with him or her.
Ask your potential mortgage professionals about the typical timeline of the loan. Having an estimated closing date and an idea of when you will be able to secure an interest rate will help you as you settle on your final decision.
In addition, make sure you read the contract and ask any questions you may have about the terms and conditions of the document. You want to ensure optimal understanding prior to deciding on a lender.
“Reading the contract in order to understand what will happen in the event the loan doesn’t go through is wise and will make sure an unpleasant surprise doesn’t occur,” said Kevin Stophel, a financial planner and advisor, according to Nerd Wallet.
Purchasing a home is one of the biggest financial decisions you will make, so working with a professional lender who is able to serve you appropriately is one of the most critical first steps of the process.
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