In this post, we present five tips for finding the best mortgage lenders for your specific needs.
Blog hook: You’ve been working hard to pay off debt and save up for a home, but you just don’t have the time to spend hours searching through hundreds of lenders.
Blog intro: Mortgage lenders are some of the most important people in your financial life. They’ll help you decide which loan type is right for you and they’ll help you make sure you get the best rate possible.
It doesn’t matter what type of loan you’re looking for – a mortgage or a home equity line of credit (HELOC), a fixed rate, or a variable rate – finding the best mortgage lender in 2019 is a daunting task.
To help you find the best mortgage lender for you, we put together a list of tips to keep in mind when researching the different lenders available to you.
Get your finances in good shape
It's important to keep in mind that you're looking for a home loan. If your personal financial situation is not in order, it could impact your ability to get a good rate on a home loan.
If you have credit problems, a major foreclosure or bankruptcy, or your debt load is high, you may have trouble qualifying for the best mortgage rates. It's also possible that you won't be able to find a lender willing to work with you.
Make sure that you're paying all of your bills on time, and that your credit report is in good shape. If you have trouble keeping up with payments on your credit cards, take steps to make things right. For example, don't close out a card that is less than 30 days past due.
Do your research
When shopping for a home loan, do your homework. Look for lenders with good service, good rates, and clear loan documentation. Find out how long it takes to close a loan and how easy it is to get a mortgage.
Visit your lender’s website and review its loan application guidelines and the fine print. You’ll find all the details in the application documents and the loan contract.
Check out the lender’s customer reviews on websites like Yelp, Google, and Angie’s List. Read the lender’s complaints about its loan officers and tellers to make sure they’re happy customers.
What kind of mortgage is right for you
Choosing a mortgage type can make all the difference in how much interest you pay, how much money you have to put down, and how much you pay in monthly payments.
There are three basic types of mortgage products: Fixed-rate mortgages, adjustable-rate mortgages (ARMs), and hybrid mortgages.
A fixed-rate mortgage is a loan that has a set payment until it resets at a certain date. Fixed-rate mortgages are generally offered with longer loan terms so borrowers can spread out the cost of the loan. They're typically used by people who want a long-term commitment and don't expect interest rates to fluctuate during the term of the loan.
An ARM offers borrowers a set initial rate that may reset after a set number of years. This type of loan is most suitable for borrowers who think interest rates will rise over the life of the loan.
A hybrid mortgage is a combination of a fixed rate and ARM.
If you don't pay attention to how much you're paying in fees, you may end up paying more than you should. Here are some of the most common mistakes people make when shopping for mortgages:
• Avoiding pre-approved lenders. Some lenders offer lower rates than others. If you think a lender has the lowest rate, call it a day. There are too many variables in the underwriting process to know whether you can lock in a lower rate. Pre-approved lenders also charge you a higher fee, so they are not always the best choice.
• Paying extra for a guaranteed rate. Be wary of lenders who charge you a flat fee to lock in a specific rate. They are often misleading or trying to sell you something else.
• Not shopping around. You should look for the best rate at multiple lenders. Make sure you shop around and compare rates and fees at different lenders. You should be able to find rates that are within 2% of each other.
• Ignoring the cost of insurance. Insurance is usually included in your monthly mortgage payment. Some lenders include a "rider" that adds another monthly fee. The difference between a "rider" and a standard insurance policy can be thousands of dollars.
• Relying on a lender's website. It can be tempting to go online and research a loan yourself. This is not always the best idea. A lender's website usually contains only a portion of your loan terms. If you don't understand the other terms, you could end up paying more or having a loan that doesn't make sense.
Compare rates from multiple mortgage lenders
Doing your research on multiple lenders will help you to avoid getting a bad deal.
Some lenders are much better than others. Look at how long it takes them to process your application, how well they explain their products, and the fees they charge.
In addition to evaluating a lender’s performance, look at its history of complaints and customer service. Ask friends and relatives who have used a lender if they were pleased with the experience. And be sure to check out the Better Business Bureau to see if any complaints have been filed against the lender.
Ask a lender to show you a sample loan so you can compare how it looks to what you're accustomed to. You'll also find a wealth of information online about the different types of mortgages.
Get preapproved
This is where a lender will evaluate your credit score and financial situation to determine how much you can borrow. If you’re looking to purchase a home, you’ll need to show that you have the ability to repay the loan. The best way to do this is to get pre-approved. Getting pre-approved will also help you shop for a home because you’ll know how much you can spend. A pre-approval letter is a statement that says your lender has approved you for a specific amount. You’ll use it when shopping for a home.
Compare loan estimates and choose the best deal
Compare loan estimates for the type of loan you want to obtain. Some lenders may charge a higher rate for loans with less favorable terms than loans with more favorable terms. You'll pay a higher rate for a shorter period of time.
Don't rely solely on one lender for your financing needs. Ask different lenders for estimates on the same loan terms. If you find two lenders offering similar products with slightly different terms, ask each to explain the difference.
Ask your lender for a written explanation of how the loan was priced. A good mortgage lender will be willing to explain its pricing methodology.
Final Thoughts
In conclusion, to find the best mortgage lenders for your specific needs, you need to look at your own personal situation and needs. There are many different types of mortgages, and they all have their own pros and cons. It’s important to understand what type of loan you need, and then compare lenders to find the best fit.
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