How To Choose The Right Mortgage Lender: 6 Essential Tips

Finding the right mortgage lender to help you secure a home loan can be a tricky, but not impossible undertaking. The goal should always be finding the right fit for your situation. Explore your options before making any final decisions and get multiple quotes if possible. Here are six tips that will guide you in choosing the best mortgage lender for your needs.

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Look For A Competitive Rate And Terms

The mortgage rates and terms that are quoted to you will vary greatly depending upon the type of loan you’re applying for, your credit score and your income. The good news is that you have a choice among numerous companies offering various rates and terms. In today’s marketplace, there are several traditional banks as well as other non-bank options that can provide the loan you’re searching for.

While a lower interest rate is always better, don’t limit your search to the lowest rates. You should also compare and contrast different terms to see which features will meet your personal needs. For example, if you plan to sell your home in 3-4 years or want a low minimum payment each month, then opt for a shorter term with a higher interest rate. If you expect to stay in the house longer than five years (or purchase it to live in) then choose a lower initial rate for a longer-term, which carries an extended repayment time period that won’t make your mortgage payments unaffordable as time goes by.

Get Multiple Quotes From Different Companies

Don’t limit yourself to just one mortgage lender. If you’re working with a real estate agent, then ask if she can provide multiple quotes from different companies or connect you to mortgage lenders in your area for more options. A good agent will strive to find the best loan option for your situation and even help assess other details like how much house you can afford based on your income and expenses as well as the size of the monthly payments that fit within your budget.

Learn About The Different Types Of Mortgages And Loans Available

Learning about the different types of mortgages may not be something that everyone enjoys doing, but it’s crucial information if you plan to apply for a home loan soon. Here are three basic home loans and what they are best for:

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A jumbo mortgage can be used to purchase a house that is $417,000 or more. Jumbo mortgages generally require a higher credit score and larger down payment, which means there may be more interest rate options available as well as different terms. 

A conventional loan is the most common type of mortgage in the United States. Conventional loans are popular with first-time homebuyers who want to buy a primary residence and don’t need any additional features like high cash-out to refinance options or flexible terms to reduce their monthly payments. 

FHA loans are similar to conventional loans except they require far less money for closing costs and other fees because they offer lower initial rates. 

Read The Terms Carefully

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Mortgage companies are known to throw in all sorts of clauses into the contract, and most clients don’t even know about them. Advice from OmahaMortgageGuy.com, an industry professional, shows that some lenders promise you one thing, then, too late, tell you that you didn’t qualify. This can be financially and emotionally devastating. It’s best not to sign anything before you have read through the fine print.

Avoid Quotes And Offers That Include Extra Fees

You often see mortgage rates quoted with something like a 1% discount for paying points and this can be tempting. However, it’s important to add up the true cost of any quote that’s presented to you because these types of quotes will often include fees for various services, such as appraisals, processing or wire transfers that are optional at best. If you don’t need those fees then don’t pay them!

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Pick A Company You Can Trust

Seek mortgage companies that have been around for a while (and preferably also in your community). Another good way to judge is whether the company has an A+ rating with reputable review sites. This doesn’t guarantee they are a good company, but it indicates that other customers were satisfied and there are minimal customer complaints.

Picking the right mortgage lender can be an overwhelming process. If you’re looking at rates and terms, compare them across multiple lenders so you know what options are available to you. Get quotes from more than one company as well as reading their terms carefully before making a final choice and if any extra fees seem unnecessary or unclear, find another quote without those costs included in it instead.

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