Most of us need to get a mortgage to buy a house. This means that you have to not just shop for a home, you also need to find the best home loan. However, a 2013 survey from the Consumer Financial Protection Bureau reported that nearly 50% of borrowers never shopped around for their mortgage.
The fact is that to get the best deal on a mortgage for your first home, you need to shop different lenders to get the best deal. In fact, many experts advise to look for a good mortgage professional before you even look for a new home.
Here are 12 tips to help you find the best lender and best mortgage when shopping for a home loan online:
#1 Know If You Want a Mortgage Broker
There are several benefits to working with a mortgage broker. He or she can save you a lot of time by doing much of the working in finding lenders suitable for your situation. However, there are some disadvantages to using a broker.
Brokers make their money by setting up the deal between a lender and a home buyer. An unethical broker may set you up with a lender that gives them the best profit and not the best mortgage for you.
If you use a broker, you should do some research on him or her. You should get references and ask other buyers how they fared with the broker.
#2 Know Which Lender You Want
Different lenders have upsides and downsides. If you work with a smaller lender, you will get more personalized service and faster response, generally. If you work with a larger lender, you may get the best interest rate.
#3 Consider the Different Loans Available
More than 65% of loan shoppers end up buying a 30 year, fixed rate loan. That does not mean you have to go with that option. You also can decide to do a five year adjustable mortgage that may offer you a lower rate. This can be a good choice if you think you will sell in a few years or refinance.
#4 Make Sure You Compare Apples to Apples
This means when you are comparing mortgage products from various companies, do not just look at interest rate. You should look at the rate, but also everything charged by the lender:
If you find a 'no fee' loan, it only means that the fees are wrapped into the rates.
#5 Talk to the Person Who Will Do Your Loan
It is a good idea to have a good relationship with the person doing your loan. This might be the bank employee, loan officer or mortgage broker. Remember that the company is often less important than the loan originator.
Mortgage loans are taking longer than they used to, with all of the additional paperwork required with new federal guidelines after the mortgage crash in 2007-9. To have the easiest time getting your mortgage, you need to have a loan professional who is responsive, easy to reach and gets things done fast.
#6 Be Ready for Costs That the Lender Does Not Charge For
Some of the added costs of buying a home are:
Finding the best closing agent can save you thousands in some states, while in others closing and escrow costs are minimal and do not vary a great deal.
#7 Be Sure Your Lender Offers the Right Program
FHA, VA and USDA loans are very useful and popular with some buyers, but not all lenders offer them. Also remember that requirements for down payment, loan to value and credit score requirements vary by lender.
#8 Know Your Credit Score Before You Start
You can get a free credit score online once per year. It really helps when you shop around to know how good your credit is. If you are well over 700, you will have an easier time getting the best mortgage rates.
#9 Give the Mortgage Loan Officer All the Details
It is especially important if you are self-employed or have a foreclosure in your past to work closely with your loan officer. You want to tell them everything about your financial situation before they pull your credit to see if they can help you.
#10 Know What You Want
If you want to keep the house for many years, it can make sense to pay more in points up front for a lower rate. If you want to sell in less than five years, you may want to stick with the higher rate and less cash out of pocket.
#11 Get Your Documents in Order
All mortgages require more paperwork than a decade ago, so to get things approved quickly, you will want to know in advance what you need.
#12 Request to See the Good Faith Estimate Worksheet
The Good Faith Estimate that is required by federal law recently was replaced; the previous one was found by some people to be confusing. Hopefully the new GFE document will be clearer, but you should also ask for the complete worksheet so that you can clearly see all fees itemized.
By following these simple tips, you will be in great position to choose the best lender and best mortgage for you.
FirstTimeHomeFinancing.com provides a news and information service by offering editorial content related to the housing and mortgage industry.
This website is not responsible for the accuracy of information or responsible for the accuracy of the rates, APR or mortgage guidelines posted by advertising banks, lenders and brokers.
All rights reserved. FirstTimeHomeFinancing.com - Copyright © 2000-2016 and Beyond