Finding The Best Mortgage Lender

Written by: Lauren Topper
05/21/2019

mortgage
If you are in the market for purchasing a new home you will likely need financing in order to purchase your dream home. You may have seen offers in your mailbox or commercials on television about pre-approvals or financing with certain lenders, but before making the long term commitment it is important to know your options. Your mortgage payment is likely going to be a thirty-year commitment so it is important to find the best lender and the best rate for your mortgage. There are some things you need to do to ensure that you are making the best financial decision for you and your family.

Getting Your Finances in Order

Before jumping right into finding a lender to finance your mortgage you should do your own research and make sure that your finances are in good shape. Some things that can affect your ability to get a mortgage or your interest rate include your credit score and the amount you can put down on your home. Your credit score should be higher than 580 to secure a loan with a low down payment. If your credit score is lower than this you should work on improving your credit before trying to get a mortgage on a home.

You can use free sites to check your credit score before having a mortgage lender to a hard check into your credit. Each time a hard check is done on your credit, your credit score will go down. You should not allow companies to do hard checks on your credit before talking to them about all of your options. If you know what your credit score is you can talk with different mortgage lenders about the options they have for you. Having a general idea of where your credit is can also help your lender figure out what your rate will be.

Shopping Around For The Best Lender

Since your mortgage is going to be one of the longest commitments in your life you should ensure that you are finding the best lender. You should compare rates from different mortgage lenders either online or in person to help you find the one with the lowest rate. While the difference between 4.5% and 5% may not seem like a big difference, it can actually be thousands of dollars over the course of your mortgage. Your interest rate will be affected by your individual situation because many things like your credit score, work history, annual income, and down payment amount can affect your rate.

While the interest rate is a major concern to most homebuyers there are other things that you should be aware of when looking to find the best lender. Some lenders charge more fees upfront when financing a mortgage and these fees can take you by surprise. You should always be sure to ask your potential lenders about any fees that will be associated with your mortgage payment other than interest and principal. Knowing about these fees and requirements upfront can help you save a lot of money during the closing process and throughout the life of your loan.

Asking The Right Questions

Each mortgage lender is different and each one can provide you with different things. While some lenders may be able to offer you a lower interest rate, others may be able to offer you a free home appraisal or even a grant to help lower your closing costs. To find out the benefits of choosing one mortgage lender over another lender you should ask your potential lenders a variety of questions to ensure that you are doing what is best for you and your family financially.

One of the first things you should ask your potential mortgage lenders is what they can do to help you lower your closing costs. The amount you pay at closing is typically thousands of dollars and can even be tens of thousands of dollars, depending on your down payment amount. This is a huge investment that can hurt your bank account. Finding ways to reduce your closing costs upfront can allow you to keep more money in your bank for emergencies or even allow you to put more down on your house to reduce your mortgage payment over time. Some mortgage lenders can provide you with grants to help reduce your closing costs. These grants can sometimes be thousands of dollars. Other lenders may be able to offer you a free home appraisal, which is usually close to 400 or 500 dollars. These things can save you money upfront and can help you choose the lender that is right for you.

Another question you should ask your potential mortgage lender is what loan is best for you and your family and how the interest rate will change with each loan. Mortgage lenders are professionals who are knowledgeable about the home buying and home selling process. They should be able to answer any and all of your questions. They should be able to help you and your family find a loan that meets your needs and helps you stay secure financially. If your potential mortgage lender seems hesitant about answering any of your questions or does not seem interested in talking to you this could be a red flag. You should find a lender who you feel comfortable talking with and one that can help you better understand the home buying process.

You should also be sure to ask your lender about the process of the loan. If your lender has the ability to close the loan in a house you can close on your home faster and this can help set you apart from other buyers. You may also want to ensure that your lender will not sell your loan to another company. When lenders sell loans to other companies it often leaves the home buyers confused about where to send payments and this can often result in missed or late payments. You will typically want to find a mortgage lender who will service your loan from start to finish.

With interest rates on the rise this year you should also ask your mortgage lender about their ability to lock you in at a certain rate. Locking you in at a rate early in the home buying process can help you save money because you will not have to leave the market to chance if interest rates continue to rise. You should check with your mortgage lender to ensure that they do not charge a fee to lock in your interest rate and that they can guarantee your rate in writing. You should ensure that the lock-in rate protects all of the loan costs. Typically the lock-in rate is only good for about 60 days, but this can change depending on your lender. You should have your lender explain how the lock-in rate process works and how locking in early can save you money.

Before signing contracts and allowing lenders to do hard checks into your credit score you should find a lender that you feel comfortable with and one that is able to answer all of your questions. Companies are always trying to find new home buyers for mortgages so you should take advantage of this. Check with different companies to find out what they can offer you and your family. You should decide what is most important to you and find a lender that can offer it. Whether you want to have a low-interest rate or would rate have a lower down payment, each mortgage lender can find ways to meet your needs. Before signing contracts you need to get your finances in order, shop around for the best lender, and ask the right questions to ensure that you are doing what is financially best for you and your family.

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