April 1, 2019
Shopping for a Lender
Buying a home is a lengthy commitment (say 15-30 years of mortgage payments) so it makes sense to find a mortgage lender best suited to your needs. Beyond finding a good interest rate, you’ll want to find a company that have professionals capable of guiding you through the process. Check out these tips we believe will give you a jump-start on finding the right mortgage lender!
Credit Score
First things first, you’ll need to work on raising your credit score (if necessary) to reassure the mortgage lender you’ll be able to make payments on time throughout the life of the loan. A low credit score will send up a red flag which means the interest rate on your home loan will be higher. A high credit score gives you more buying power and the ability to negotiate better interest rates with fewer additional fees. One key thing to strive for is having a low balance (or debt) on your cards. Here is a good article, from Credit Card Insider, on how to pay down credit card debt fast-sh and help builder you credit.
Types of Lenders
It seems like there’s an ocean of lenders to choose from due to a crowded industry. These are the most common types lenders you’ll be able to choose from.
Mortgage Bankers – A mortgage banker is a company, individual or institution that originates mortgages. Mortgage bankers use their own funds, or funds borrowed from a warehouse lender, to fund mortgages.
Savings and Loans – Also known as S&L, a thrift, or simply a savings and loan. A financial institution similar to a bank that specializes in helping people get residential mortgages. Savings and loan associations can be owned either by their customers or by shareholders and are often community oriented!
Credit Unions – A type of non-profit financial institution controlled by its members, the people who deposit money into it. While traditional banks are run by shareholders whose goal is to maximize profits, credit unions return all profits to its members in the form of more favorable interest rates.
Correspondent Lender – Local mortgage loan companies that have the resources to make your loan, but rely on a pipeline of other lenders, such as big banks, to whom they immediately sell your loan.
Mutual Savings Bank – A type of thrift institution originally designed to serve low-income individuals and are locally focused as well as competitive.
Pre-approval Letter
An important step in shopping for a home is obtaining a pre-approval letter from a mortgage company. It can put you ahead of your competition by proving to the seller that a lender has looked over your finances and determined you can afford to buy the home. To get pre-approved, you’ll have to provide a fair amount of financial information but it will all be worth it when the seller sees your offer is likely to close!
Compare, Compare, Compare
This part is a bit tedious as there are vast amounts of lenders to choose from. Start your search online, then meet with a mortgage broker in-person to begin the loan application process. This will insure that you get an accurate quote and once you’re satisfied with the results, you’ll be read to lock in your rate. After collecting a few quotes, it is time to compare to see which lender can provide you the best price, rate and security. Having trouble picking between two lenders? Use the competing quotes as leverage to negotiate! Now, YOU are thinking like a Realtor®!
We have a Network of Professionals to aid in every step of the home buying process! Click here to see our list of referred High Country Lenders!
Knowledge and the Fine Print
Picking a lender requires lots of time and consideration but it will all be worth it in the end. Before you make your final decision, ASK questions…lots of them. What are their turnaround times and how do they prefer to communicate? What lender fees will be added at closing? Can any fees be waived or rolled into your mortgage? All important things to stay on top of! The fine print contains all the exact finance terms, items included with the home, who pays what closing cost, the closing date, and many other important pieces of information. Your Realtor® will help you keep track of these but it always good to read everything through clearly. If you have questions, ask your Realtor AND your lender to get straight, honest answers.
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