Finding the best mortgage lender offering favorable terms with the lowest possible interest is possible, but if you know a few tips and tricks you can turn to your advantage. Here is a comprehensive guide to give you a head start in finding and working with the right mortgage lender.
Sources of mortgage
There are several sources you could go to for a mortgage. The first one is your local bank with which you’re operating an account. However, banks don’t have a variety of products that you can weigh before picking on one. Most of them only have their own one or few products and so if the terms aren’t favorable to you, you might be limited.
Conventional banks & credit unions
Banks and most credit unions offer mortgages as part of their portfolio. You can check in with the banks or credit unions and ask to be shown the options they’ve available. Some banks will even allow you to make the application online after which they’ll assign you a loan officer. But before you can access this option, you’ll need to have a functional account with the bank and a member of the credit union. The terms and conditions will vary from one bank to another and also from one credit union to another.
Nonbank mortgage lenders
There are many private companies providing mortgage loans or other types of loan facilities. The major advantage with private lenders is that they tend to expedite the process so that the waiting period is short. Also, nonbank lenders also will easily overlook some issues especially if you’ve got a problematic credit history. As long as they can verify that you’ve got the capacity to repay their money, you’ll be set to become a homeowner.
These are specialists at searching for multiple loan options, comparing them, and settling on one that’s most convenient for their client. It could be the best option especially if you’re squeezed for time or don’t know how to navigate the backstreets of the lending sector. The mortgage broker acts on your behalf so that you only need to assess the options they come with and close the deal. They’ll also advise you on the best option to pursue based on their many years of experience and the specific facts pertaining to your financial position.
Finding the right mortgage lender
There are thousands of mortgage options available out there. But that doesn’t mean every one of them is right for you. You can start your search for a mortgage at your local bank. Compare the options they have alongside their terms and see if it’s something that can interest you. Given the limited range of products plus the high interest rates typical of banks, it’s expected that you’ll want to look elsewhere. However, whatever findings you get from your bank or local credit union will form the basis upon which you’ll evaluate the other options you come across.
You can also search online and see the various options that come up. If you find some that look interesting, narrow them down and investigate them more. Another option is to talk to friends, family, and colleagues to see if there are any options they can recommend. You can also reach out to the professionals in the real estate industry you’re familiar with and ask them to refer you.
How to Prepare
Taking a mortgage is a big decision that requires you to first take some good time to think about it before making the final decisions. As you brood over the issue, you need to ask yourself about the financial implication of having a loan facility. When you’ve decided, do the following to help you stand a better chance of getting a good deal.
- Consider your credit score. Several months before starting the application process, make deliberate efforts to improve your credit score if it’s not in good standing. Make all payments in good times, pay off credit card balances, don’t take out any more loans, and ensure you’re servicing the existing ones if any. If you have multiple credit cards, balance their use since this will reflect positively when applying for a mortgage.
- Start saving for the down payment. If you have a couple of months before the actual application, endeavor to save at least 20% of the down payment. That way, you don’t have to strain your financial resources when the time makes for the first payment.
- Have a stable source of income. Many lenders will frown upon any application that seems to suggest that the applicant isn’t in good financial standing to pay them off. You’ll therefore need to work towards having a stable income by the time you’re starting the application process.
Important questions to ask the mortgage lender
The following are the questions that can help you arrive at the mortgage lender that’s the right fit for you.
- What’s the duration the entire process will take from initiation to closing the deal?
- Who is the contact person I’ll be talking to or interacting with after the initial appointment? Is it you or you’ll designate another person?
- How many steps will have to go through before the process is complete? How many of those will be online and how many will require face-to-face meetings?
- How many lender options do you have? Why did you settle on this specific broker? What sets them apart?
- What are your fees and charges? Who is going to pay for them, the lender, me, or both of us?
- Which will be our method of communication?
- When the process gets to the underwriting stage, will I still work with you or you’ll hand me over to someone else?
Now you know how to choose a mortgage lender. Be sure to find the right broker to help you get through the entire process.