Choosing a mortgage lender is a process, but it doesn’t have to be difficult. Here are four key ways to determine if a lender is right for you. (iStock)
Although the pandemic has brought with it a myriad of negative economic and personal financial effects, the housing market is an industry that has brought several benefits to families over the past year. When the Federal Reserve cut interest rates over a year ago, it had a knock-on effect on mortgage and refinancing rates, causing them to drop below 3%.
According to Fannie Maes Mortgage Lending Survey in the fourth quarter, consumer demand for mortgages and new mortgage loans rose from 55% in 2019 to nearly 70% in 2020. While it is still a good time to take out a mortgage or get refinance, it’s still a good time right lender for your needs, just as you would for a car loan, personal loan, or student loan.
WILL A NEW CREDIT CARD AFFECT MY MORTGAGE APPLICATION?
Choosing the wrong lender or type of mortgage can easily cost you hundreds of dollars a month. So, consider these key factors when narrowing down the right mortgage lender for your home loan:
- price
- technology
- maintenance
- Loan Officer vs. Broker
You can get started by using Credible’s online tools to find the best mortgage rates and qualify for a home loan in minutes. So let’s round up a few tips to help you find the right mortgage lender for you during the home buying process, whether you are looking for a USDA loan, compliant loan, or anything else.
price
The total cost of a mortgage is an important indicator to consider when choosing a lender and loan product. While you can control how much money you deposit, other costs like interest, taxes, and insurance will all go into the price of your home loan.
For example, if your down payment is less than 20%, you will likely need to get personal mortgage insurance that covers the lender if for some reason you cannot make your mortgage payments.
“Many lenders have subscription fees that are around 1% of the loan amount,” said Loren Howard, founder of Prime Plus Mortgages. “Not to mention, there are also closing or title fees that can impact your equity balance and overall mortgage costs.”
Are you considering mortgage refinancing? 2021 COULD BE THE BEST TIME TO GET ONE
Howard also mentioned how much of these costs will be included in your total loan amount or prepaid when you close. Hence, it is best to get exact numbers of their fees from lenders and look for the best terms. Credible can introduce you to multiple mortgage lenders and offer you personalized rates in minutes.
technology
Thanks to modern technology, obtaining a mortgage no longer has to be so tedious. While you may still have a lot of paperwork to fill out, most lenders now allow you to do it online and conveniently submit documents through an online lender portal.
However, there is still a technology gap among mortgage lenders. Some companies have streamlined the document capture and lending process, while others are still using paper documents and processing with a slower, manual process.
Check with lenders beforehand about how they will accept paperwork and process the details of the loan application while narrowing down your top options.
maintenance
It is important to understand that once you close your mortgage, the lender you choose may no longer service your mortgage. A mortgage servicing company is the institution that holds your mortgage and to which you make payments.
Chris Birk, Director of Education for Veterans United Home Loans, said, “Service is essentially anything to do with the life of your mortgage once it is closed, including collecting monthly payments, making sure property tax trusts and homeowner insurance are in place and dealt with problems in mitigation. “
Birk added that some lenders could sell your loan right after you close, while others could hold your loan for years and then gradually sell it.
DOES YOUR MORTGAGE REFINANCING REDUCE YOUR CREDIT CREW?
While what happens to your service doesn’t affect your interest rate or the terms of your loan, you should ask your lender if they offer an in-house mortgage service if this is important to you. During the mortgage process, you can develop a relationship with the loan officers. If you really like your lender and have carefully chosen them, it makes sense to keep your mortgage with them whenever possible.
Loan Officer vs. Broker
There are so many different words and titles that are used during the mortgage process. One thing that can be a little confusing is how to deal with a loan officer versus a mortgage broker. Both are not the same. A loan officer usually only offers mortgage options from the financial institution he works for. A mortgage broker acts as an intermediary between you and a number of different mortgage lenders.
Mortgage brokers may charge additional fees as they help you shop. With a loan officer, you don’t pay any fees because you have likely decided that you are getting a mortgage from their financial institution (or bank).
GET A SHARED MORTGAGE? HOW YOUR CREDIT VALUES BECOME FACTORS IN
Credible doesn’t charge any fees to help you shop and find the best mortgage lender. It is important to compare rates and terms before deciding on a single lender. Even if you’ve heard good things about a particular lender, it’s often best to compare all of your options before making a decision.
The bottom line
Choosing a lender is a process – in addition to checking different loan types – but it doesn’t have to be difficult. Make it clear what you are looking for and what is important to you. Note that there may be additional fees, fine print, and other factors that can affect your experience.
Also visit Credible to qualify for a mortgage and find the best lender for you. In just three minutes, Credible can help you find the best lender and mortgage rates to choose from without checking your credit report.
Do you have a finance-related question but don’t know who to contact? Email the Credible Money Expert at moneyexpert@credible.com and your question could be answered by Credible in our Money Expert column.
source https://collegeeducationnewsllc.com/4-things-to-consider-when-choosing-a-mortgage-lender/
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