How to Choose a Mortgage Lender

March 7, 2022

After finding your dream home, you'll find that there are a lot of mortgage brokers willing to help you get a homeowners loan.

However, we all know that not every mortgage lender will do.

Your mortgage lender should not only help you choose, apply, and close on your preferred home loan, but they should also act as your home lending advisor.

What is a home lending advisor, you ask?

A home lending advisor is someone who helps you find the best financing option to fit your homeownership needs. If you're a first-time homebuyer, a home lending advisor also assists you navigate the home buying process offering the support, guidance, and expertise you need to make the process easier.

So, what do you need to look out for when searching for the best mortgage lender?

Read on.

1. Know the Type of Mortgage You Need

Different mortgage lenders offer various loan products.

So, it's essential to know the type of mortgage you want if you want to find the best lender for your needs.

Here's a look at a few mortgage loans that you can discuss with the different lenders.

· Fixed-rate mortgage loan – This is the most common type of mortgage you'll find. The interest rate for this mortgage is fixed. However, the longer the payment term for the loan, the more interest you’ll pay. On the other hand, a shorter payment term will allow you to pay lower interest but higher monthly payments.

· Adjustable rates mortgage loan – The difference between the fixed and adjustable mortgage loan is that the latter's interest rate is adjustable. The rate will increase or decrease in line with market fluctuations. Although this kind of loan can be challenging to budget for, there are mortgage caps that limit the lender on how much they can increase your interest rate or monthly payments.

· Government-backed loans – These are government-secured loans characterized by lower down payment and credit score requirements. Unfortunately, they are only offered by approved lenders and are meant for specific buyers. Examples of government-backed loans include FHA, VA, and USDA.

2. Check the Interest Rates

Checking the different lender's interest rates is the easiest way to choose your preferred mortgage broker.

However, it shouldn't be the only factor to consider.

Besides, to qualify for low mortgage rates, you need to have a great credit score, make a solid down payment, and have a stable income that can guarantee the lender that you'll be able to make the monthly payments comfortably.

Additionally, it's essential to be aware of the current mortgage rates as you shop around for a lender with the best rates.

3. Fees and Discount Points

When comparing the interest rates among lenders, ask about the fees. Some lenders will have low-interest rates but higher upfront fees which may not be economical.

Additionally, you need to inquire about mortgage points. Discount or mortgage points are fees that typically cost about 1% of your loan's total. These points can help reduce your interest rate.

4. Assistance Programs

If you're a first-time homebuyer, you may be eligible for down payment assistance programs. Such programs help homebuyers who are short of cash raise the down payment without depleting their savings.

Compare different lenders and the down payment assistance programs they offer. While some of the programs are meant for low-income first-time homebuyers, others target active military members and veterans, while others give preference to health workers and educators.

Interview different mortgage lenders or do a simple online search to determine if your mortgage broker offers any assistance programs and if you're eligible for them.

5. Check Reviews and Meet Your Lender

It's not enough to consider the interest rates and the fees of the different lenders. Most lenders know that many borrowers only consider the mortgage interest rate, so they advertise for the lowest rates possible.

Thus, it's also vital that you read online reviews of the different lenders to know their past customers' experiences. Reviews will also help you know how lenders treat their customers. For instance, some lenders will offer their clients helpful tips and handy services. Other lenders will give clients recommendations of other professionals they may need in their home buying process.

Lastly, consider meeting the individual mortgage broker you'll be working with. Talk to them face-to-face to get to know them. Consider factors such as the person's experience, personality, and professionalism.

The professional you'll be working with can significantly impact your home buying process. So, if you have a bad feeling about them during your face-to-face meeting, it's better to look for another lender.

In closing, don't be in a hurry when choosing a mortgage broker. Look at the mortgage details and ask as many questions as possible. Read reviews and also meet your lender to discuss the mortgage process.

Hopefully, with these tips, you'll find a mortgage broker who'll make your homeownership journey a breeze.



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