You’ve decided to either buy a new home or refinance your current home. With all the different mortgage companies out there these days, how do you determine who is the best lender to finance your dream?
The most important factors to consider are the interest rate and closing costs. But those numbers are only the beginning to choosing which mortgage lender should finance your home. It is important to research your lenders carefully and get to know the company and individual you will be working with, before signing on the bottom line.
Here are a few easy steps to follow when determining which home loan lender is right for you:
1. Compare fees, as well as interest rates.
First, examine the APR the mortgage company offers. Then, examine the fees associated with that loan, including, but not limited to, closing costs, origination fees, and commissions. To obtain a more accurate breakdown of costs associated with your mortgage, ask for a written “good faith estimate” from each of your potential mortgage lenders. This estimate should contain all of the
fees associated with your mortgage. You should also ask about other charges that may be incurred, such as pre-payment penalties.
2. Be an individual.
Bigger doesn’t always mean better in the case of home mortgage lenders, especially if you have different circumstances than the average homebuyer. Some lenders specialize in loans for people with bad credit, or if you have little or no money for a down payment. Look for a lender who has experience and offers various programs for borrowers with different needs.
3. Look for options.
Now more than ever, there are countless different loans available to consumers. Look for a lender who offers a wide variety of loans, such as conventional fixed rate loans, to adjustable rate mortgages, interest-only options, or hybrid ARMs and option ARMs, and a lender who is willing to explain the differences between these loan options and how they best fit into your personal financial plan.
4. Service.
It may be the simplest piece of advice, but choose a lender with top-notch customer service. A good way to test a mortgage company’s level of service is to ask questions, such as their policy for locking into
affordableinterest rates, or ask for an amendment to something they originally quoted you. Also, note how well they listen to your wants and needs. If the service isn’t good when you are shopping for a loan, imagine what it will be when you may have a problem a few years down the road.
5. Check out their reputation.
Ask for references from satisfied customers. Talk to a trusted friend or relative about their experience with a particular home mortgage lender. This is one of the quickest ways to determine the level of service you may receive from a potential lender.
6. How do I pay?
Ask your lender what method payment is required. Do they give you a booklet of coupons or a monthly bill that you send back with a check? Or can you set up an automotive withdrawal from the bank or pay online? What about a grace period and late payment fees? These are all important factors when choosing which mortgage lender is right for you.
These are all important factors when
shopping for a mortgage company to finance your home loan. While APR may seem to be the most important factor, there are so many other elements that make a mortgage lender desirable. Carefully question each potential lender to determine who will best meet your financial needs before signing on the dotted line.