For most people, there is no more significant a financial transaction in their lifetime than that of a mortgage loan. Despite its importance, getting a mortgage is infrequent enough for the average person that it can be a daunting process. However, it doesn’t have to be that way. In this series we are going through each step on the way to getting your mortgage to better help you be prepared for the process!
We have discussed preparing your finances for a mortgage as well as selecting a loan type. Now it is time to talk about choosing a lender. There are a few factors to consider when making this decision.
Many people who are looking for a mortgage will inevitably opt to seek a loan with whoever will give them the best interest rate. This is not necessarily a bad choice, but there are other things to consider when selecting a lender as well.
For example, what is your preferred means of interaction/communication with your lender? If you want to easily be able to stop in and sit across a desk from someone, you will want to select a lender with which that is possible, as well as confirming that they don’t intend to sell your loan.
A worthwhile question to ask of a potential lender is also what their turnaround times are with regard to their mortgage loans. This will affect your closing and may impact your decision on lenders.
Fees differ with different lenders and knowing what each lender charges can save you any surprises at closing. Additionally, some lenders will roll closing costs into the mortgage, which can help those who don’t have a lot of extra cash.
Down payments matter from bank-to-bank as well. Some lenders require more than others, and you will want to know that amount early so you can organize your money. The home buying process is stressful, so the more you can line up in advance, the better.
Finally, what are the interest rates offered by each lender you are considering? Matters of convenience and expedience are important, but the interest rate will impact your total expense over the lifetime of your mortgage, so it is of great importance. Don’t settle quickly on a lender. Tools like lendingtree.com can help you locate good options, and the Nationwide Multistate Licensing System Registry can help you verify that the lenders you are considering are registered in your state.
If a lender is not clear, easy to work with, ready to answer your questions, and eager to walk you through the process, you are probably best suited to look elsewhere.
Next: Applying for the loan