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Which mortgage is right for you? Part Five: How do I decide which mortgage lender to use?, by Sharon Bartlett.
By Sharon Bartlett
Which mortgage is right for you? Part V
How do I decide which mortgage lender to use?
Is finding the right mortgage lender all about finding the lowest rates? Well, that’s probably true, but do not forget that it is also important to make sure that you are comfortable with the lender you trust to originate the loan.
Even though many companies or lenders use the same lending processes and infrastructures, many differences can affect the fees charged on the services you are receiving from the lenders. And speaking about services, you should consider the quality of services you are getting.
When it comes to getting the best mortgage lender, I’d advise you to shop around. It pays to shop around and talk to at least three or four lenders before making any commitments. This will give you a sense of the person you’ll be dealing with for the next 15 or 30 years. Also, you will be able to compare the interest rates offered by the companies, the terms and conditions of the loan, and so much more. So do not settle for the first lender you come across. It is also important to ask your agent for recommendations; remember, agents are experienced in this field; they are the boots on the ground and present a wealth of experience, but it is best to do your research. Finally, ask a friend or a family member, or better yet, reach out to me today for the best recommendation on who to work within Texas or countrywide.
WHERE TO GET MORTGAGE LOANS
In the last four segments of this series, we’ve mostly covered the basics of mortgage lending, where I talked mostly about the FHA Loans and Conventional loans and their differences. What I have not touched is where you can get the mortgage loans.
There are so many companies and institutions that will help you get a mortgage loan; local banks, online lenders, or even mortgage brokers work with lenders.
It is important to note that once a lender accepts your application, leading you through the whole process to closing are originating the loan. Once you close on the mortgage, the loan might be sold to another company charged with the responsibility of collecting the payments from you.
CONVENTIONAL BANKS
banks offer loans to their customers as part of their portfolio of services and provide other products such as savings and checking accounts. You can apply for a mortgage via two means, inperson and online, and be assigned a loan officer. Conventional banks work best for people who already have accounts and want to get personalized services from the bank.
CREDIT UNIONS
in the United States, there are more than 5,100 federally insured credit unions ranging from small lenders to very large corporations. And just like the banks, they have a variety of financial services that they offer to their customers, including savings and a checking account. More than half of the loans they offer are mortgages.
Getting a mortgage from a credit union is quite simple because all you need is to be a member, which means you have to have a “common bond” with other members.
One of the reasons why many people opt for a credit union is because of their service and the memberonly deals that they offer.
NON-MORTGAGE LENDERS
these are mostly companies that offer services exclusively online. They might specialize in just mortgage loans or even offer a few types of loans in addition to the main service offering, which is mortgage loans. One of the main advantages of working with non-mortgage lenders is how they process your requests. And you might not think this is a non-issue, but some of the largest online mortgage companies have built their brands on fast turnarounds. Some of the reasons you might consider working with a non-mortgage lender are if you have blemishes on your credit or need a non-
MORTGAGE BROKERS
Working with mortgage brokers is by far one of the greatest benefits you can bring to yourself during this process. Mortgage brokers are well connected, and if you want someone to bring you multiple lenders and come up with the best of them all, working with the mortgage broker might be your best bet. They will review offers from a network of lenders and advise you on the best loan offer. In addition, they act as your intermediary with the lender by helping gather your documents and providing them to the underwriter. However, working with the mortgage broker might be costly as brokers often earn a fee and/or commission that you will have to pay at closing.
PREPARING FOR THE PROCESS
before you start your application process to seek a mortgage pre-approval, make sure that you are financially ready to take on the loan and get the best possible rates. Here are some of the things you need;
• Improve your credit score: you need to check your credit score for at least several months before applying for the mortgage. If it’s bad, you need to work on improving it. Make sure also to pay any outstanding credit card balances and make sure that your payments are done on time. • Save for your down payment. Even though many lenders say they need a downpayment of 20% or more, you can get as low as 3% down as long as you can effectively cover the monthly payments. • Ensure that your income is stable: most lenders will want to see that you have enough income to afford the monthly payments now and also in the future.
After that, you are ready to start the process to become a homeowner. But, before settling on a winner, it’s best to first compare the interest rates that they are offering, the fees each is offering, and also, make sure what you are getting is the best deal.
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