How to Find the Right Mortgage Lender

Point of Interest: Choosing a Mortgage Lender

Buying a house should be an exciting time, and if you use a systematic approach to find the right mortgage lender, you can ensure a positive experience for decades to come. Dedicate the right amount of time to the process and make sure you’re as well informed as possible.

Deciding on the best place to get a mortgage can seem like a tall task given that there are so many options to choose from. It can be difficult to know where to start when trying to answer the question of how to find the right mortgage lender, especially if this is your first home purchase.

Don’t fret, though. Whether you’re suffering from information overload or just need help finding your footing, there are plenty of strategies you can employ to efficiently and effectively find the right mortgage lender and loan for your home purchase.

What are mortgage lenders?

Mortgage lender is a broad term that refers to all individuals, banks, credit unions and online companies that offer loans to home buyers. While there are some behind the scenes people involved in the home loan process, the mortgage lender will be your main point of contact throughout the application process and the life of your loan.

How to find the right mortgage lender

Finding the best place to get a mortgage does not need to be hard or overwhelming. A strategic and systematic approach to the process can help protect you from making costly mistakes, feeling overwhelmed or getting lost in the process.

There are two essential keys to finding the right mortgage lender — adequate information and dedication of time. Before you begin comparing lenders, you’ll want to educate yourself as much as possible on the process. Understand the different types of loans available, the terminology mortgage lenders use and the different steps of the approval process.

While mortgage lenders are tasked with educating borrowers, it’s best to do your own research prior to talking to a bank or credit union. This protects you from getting cherry-picked information meant to close a deal. The process of securing a home loan is straightforward but there are unique nuances you’ll want to be equipped to handle.

You’ll also want to compile adequate information about yourself, your situation and your goals. Lenders will need to understand your finances, employment history and credit picture to determine what they can offer you. Compile things like your credit score, pay stubs, borrowing history, cosigners and information on any gifts you might be getting from friends or family before talking to them.

Once you’ve got your information together, it’s time to begin comparing lenders. Make sure you dedicate the necessary time to this step of the process. You’ll be with this lender for the next 10 to 30 years, so you’ll want to make sure it’s a good relationship. Identify the parameters most important to you and your family and compare your options based on those factors.

Tips on finding the best place to get a mortgage

1. Determine your credit score

One of the most important pieces of information you’ll need to know is your credit score. Mortgage lenders use this number to help gauge your creditworthiness, which helps them determine if they can approve you for a loan, what types of loan you’re eligible for, and the best interest rate they can offer.

It’s important to check your credit score as early as possible in case there are errors or incorrect information you need to dispute. You’ll need time to reach out and get any misinformation corrected, which will help to raise your score and improve your chances of approval while lowering the interest rates you’re eligible for. You can get a free credit report once every 12 months at AnnualCreditReport.com.

If you see any discrepancies or errors on your report, it is important to handle them with the credit bureau immediately to avoid issues during the mortgage process.

2. Decide on a loan type

Not all home loans are created equally. Different types of mortgage loans exist for different purposes, and factors like whether you’re a first time buyer, military, have good or bad credit or want to make a large or small down payment will affect the type of loan you should apply for. There are several mortgage loan options such as a conventional loan, adjustable-rate mortgage (ARM), and government-insured loans such as FHA, VA and USDA loans, and all of them have different pros and cons depending on your situation.

3. Compare lenders offering your loan type

Choosing the first mortgage lender you find in a quick Google search or the one recommended by a friend is not the right way to go about choosing a lender. Start by determine the metrics and distinguishing factors that are most important to you and compare multiple lenders against those terms.

This is one of the largest purchases you’ve ever made and will be a relationship you keep for several decades, so those factors alone should make you want to compare as many different lenders as possible. At a bare minimum, compare five to seven different lenders that offer the type of loan you’re looking for.

4. Examine more than just the interest rate

While the interest rate on your mortgage may be the most important factor to weigh, it’s not the only factor. Don’t get tunnel vision and only compare lenders based on the rate they’re willing to offer you. Compare things likes additional fees, average closing costs, the bank or credit union’s reputation, the length of the loan, and any additional terms affecting cost and repayment. You can also inquire about any down payment or closing cost assistance programs they may offer.

5. Don’t ignore intangibles

The mortgage lending process is all about numbers, but it’s important to realize that your relationship with your lender is one you’ll be a part of for a long time. Make sure you’re comfortable with how the company operates, how easy its mortgage management tools are and how accessible the company is when you need assistance. These factors can’t be quantified, but they are just as important when it comes to finding the right fit for you.

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