5 Steps to Choosing the Right Mortgage Lender for You
When it comes to finding the best mortgage loan, it is about more than shopping for the lowest interest rate. It is equally important to make sure that you are comfortable with the company from which you are getting a loan. Many parts of the mortgage process are usually the same across all lenders; a couple of key differences can affect the fees you are charged and the service you receive, which are worth considering when finalizing the shopping around process. In this article, we will discuss where you can get a mortgage and some helpful tips for choosing the right mortgage lender for you, among many other tips.
Continue to read to find five easy steps to choosing the right mortgage lender for you.
Where Can You Shop for a Mortgage?
There are plenty of companies that can help with securing a mortgage loan. From a local bank branch where you have a savings account to an online lender or a mortgage broker that works with many lenders, the options are limitless. Lenders who accept your application and lead you through the mortgage process up until closing are loan originators; once you close on a mortgage, the loan may be sold from the loan originator to another company, which can be in charge of collecting payments from you. Below are a few more places where you can shop for a mortgage lender:
Conventional Banks
Mortgage loans are among the many services at banks, which offer checking and savings accounts, other types of loans, and possibly investment services. You can always apply in person or online at a bank, and you will be assigned someone called a “loan officer.” This option can be appealing if you already have accounts at the bank and you want to get personal service from a community bank or local branch of a large institution.
Credit Unions
There are plenty of federally insured credit unions in the U.S., from small-time lenders to multi-state operations. Like banks, credit unions come equipped with many financial offerings, including savings and checking accounts, and more than half the loans issued are mortgages. To secure a mortgage loan with a credit union, you first have to be a member, which means that you have to have a “common bond” with others. Credit unions can come in handy because of their services and member-only exclusive deals.
Nonbank Mortgage Lenders
Mortgages can be issued with nonbank mortgage lenders, including companies that offer their services exclusively online rather than other options. These types of companies might specialize in just mortgage loans or offer a few types of loans in addition to mortgages. One advantage of working with one of these lenders is the speed of the process, as the largest online mortgage companies are renowned for their quick loan turnaround. If your credit history has blemishes or you need a non-conventional loan, nonbank lenders may be more appealing to work with.
Mortgage Brokers
If you want to have someone look up multiple lenders for you and come up with the best loan option available to you, working closely with a mortgage broker may be your best bet. A mortgage broker reviews offers from a network of lenders to advise you on the best loan out there, then will act as an intermediary between you and the lender by gathering your documents to provide them for the underwriter. A mortgage loan through a broker can cost you more because brokers earn a fee or a commission that you might be obligated to pay at closing. It is always recommended to closely review and compare all feeds for mortgage brokers.
5 Easy Tips for Choosing a Mortgage Lender
There are numerous options available to you for a mortgage, and it can be overwhelming. Use the following five easy tips to narrow down the list of potential lenders to select the right one for all your needs.
- Indentify Appealing Loan Terms. Before you choose the right mortgage lender, you need to know what it is you want in a loan. Are you looking for a 30-year or 15-year term? Do you want to see a fixed-rate or adjustable-rate mortgage? Will you qualify for a conventional loan, or will a jumbo mortgage work better in your favor? Once you can narrow down these details, you can easily filter out the lenders that don’t offer the mortgage products you want.
- Ask Around for Referrals from Friends and Family. Online reviews are helpful, but don’t overlook the advice of your trusted friends and family. Engage and ask around your social network, which they used for a mortgage, and you might get some prime information about what companies and which to avoid.
- Talk to More Than One Lender. Speaking to one lender might be easy. However, it is recommended that you cast a wide net and meet with more than one lender. Ask whether or not a lender will service their loans or sell them, how you might be able to reach customer service, and what kind of online or mobile account access is provided by them.
- Compare Both Fees and Rates. Homebuyers should speak to lenders and ask whether application or origination fees are offered, and the advertised rate can turn out to be buying points, which may increase closing costs.
- Stick Through the Preapproval Process. Many different lenders will offer a preapproval process, allowing you the chance to receive an estimate of your interest rates and costs. Preapprovals are non-binding, and a preapproval should be gained through several lenders to better compare numbers. A preapproval, however, can reduce your credit score by a few points if a hard inquiry of your credit report is required.
How to Accurately Compare Mortgage Loan Offers
Before settling on the winning lender of choice, it is important to compare interest fees and rates offered by at least three lenders so that you can be sure that you have the best deal. Below are the following ways to compare the offers:
- Interest Rates. This is an obvious choice when it comes to comparing and settling on a lender, but it should not be your only determining factor. Keep in mind that rates will change daily, and you may want to be sure that you have the right lender before locking in a rate and finalizing the application. However, you should also ask about points, which are fees that might allow you to lower the interest rate. It is always important to find out how much they cost and whether you need them at all.
- Fees. Many fees are associated with a mortgage loan, though not all of them are understandable. Some lenders might list the fees individually, while others will lump them together, so it is important to ask about all of them–including underwriting costs, application fees, and others that are charged at closing. Compare lenders and work on negotiating as many of the fees as possible.
- Mortgage Insurance and Down Payment. You will want to put down as much money as possible on a mortgage loan, but not at the cost of your savings account. For that specific reason, it is important to work with the lender to see if there are down payment assistance programs that will help you get the loan without stripping your savings, especially if you are buying a home for the first time.
Conclusion
Once you have made the ultimate decision of which lender is best for you, it is important to complete the application. As long as all the paperwork is in order and there aren’t any financial issues that arise before closing day, you have likely been through the toughest part of the mortgage process. You should be able to look forward to signing your loan documents at closing and moving into your new home. Trust the professionals at Palm Beach Coastal Realty to guide you to find the home of your dreams in the many beautiful neighborhoods that make up Palm Beach County, FL, today!