Shopping for a new home without knowing exactly how much you can afford can be extremely frustrating. Imagine how you’d it would feel to find the perfect house after months of scouring the market, only to realize at the last minute that you can’t afford it.
To avoid situations like this, it is highly recommended that you choose a lender before you start shopping for a home. Your lender will help you set a budget, so that you can streamline your search and focus on prospects that are actually worth your time. Unfortunately, choosing the right mortgage lender is more difficult than it sounds. In fact, it may be one of the most complicated decisions of your life.
With the sheer amount of competition on today’s market, you probably won’t have a hard time finding a lender who’s willing to approve your loan application. However, just because a lender is willing to give you a loan doesn’t mean it’s the right lender. Don’t jump on the first deal that lands on your lap. Take some time to do the research and consider all your options so that you can make an informed decision. Always keep in mind that you’re going to be stuck with this mortgage for years to come, so it’s important to make sure that you’re making the right choice.
Luckily, you’ve stumbled across the right article. Stated below are our top tips to picking the perfect mortgage lender.
Decide if you want to get a mortgage broker
The very first question that you need to ask yourself is whether or not you need a mortgage broker. The right mortgage broker can help you find the mortgage lender which best fits your needs. He will essentially do all the heavy lifting for you, allowing you to save a ton of time and effort. However, be very careful when choosing a broker. Always keep in mind that brokers make money from negotiating successful deals, so a shady broker might prioritize a large commission over getting your best interests.
Decide if you want a small or large lender
After you’ve decided on the mortgage broker issue, the next thing that you need to consider is whether you want a small or large mortgage lender. Smaller lenders tend to provide more personalized service since they have a smaller clientele. However, larger lenders tend to have lower interest rates.
Ask for your family and friends
There’s more than one way to skin a cat. Although mortgage brokers are certainly good at what they do, they aren’t the only way to find good lenders. Try asking your family and friends for referrals instead. Put together a shortlist of potential mortgage lenders and start your research from there. This should help you save a significant amount of time and effort by ensuring that every lender on your shortlist is someone you can immediately trust.
Ask your real estate agent
A good real estate agent will be just as knowledgeable as a mortgage broker when it comes to the best lenders. On the other hand, smart lenders pay give special care and attention to referrals in the hopes of getting more from the real estate agent. Take advantage of this by making sure that the lender knows that you came because of a recommendation from your agent. If all goes well, you might be able to significantly reduce closing costs and lessen any potential negotiation pressure.
Research the lender
The purpose of every tip we’ve discussed up to this point was to develop a shortlist of potential mortgage lenders. Once you have a shortlist, you can then focus your attention on researching each lender included therein. Your research then needs to be conducted in two steps.
The first step is to research the lender online. Use search engines to learn everything you can about the mortgage lender. What you’re really looking for are details regarding their offers, as well as reviewers from previous clients. Obviously, if the lender has a lot of negative reviews online, then that should raise a red flag for the next step.
The second step is to pay the potential lender a personal visit. The purpose of this visit is to get a better feel for the lender and determine if they’re a good fit for your needs. Make sure that you prepare a list of questions that you need to ask before your visit. Some of the most basic questions include: the interest rate, processing fees, potential penalties, and possible discounts.