Especially when interest rates are low, you can go online and see dozens of ads for mortgages each day. If you’re in the market for a home loan, it’s tempting to click on the ad that shows the almost unbelievably lowest rate.
Of course, that’s what the lenders want you to do. They are using those low rates to generate leads for their loan business. But there’s more to picking the right lender than simply clicking on the lowest rate you see on a screen. Not all lenders or loans are created equal, and your individual circumstances might make one more suited to you.
So it’s worth shopping around. Here are four tips for finding the right mortgage lender.
Get several quotes
A low interest rate doesn’t always mean the lowest prices when it comes to lenders. Closing costs and fees can vary from lender to lender, so it’s essential to get quotes on total costs from a few different places.
When you’re shopping for a home loan, ask each potential lender to provide a loan estimate. It’s a document required by law, and shows you the fees that will be charged as well as your interest rate and monthly payment details. A loan estimate is the best way to accurately compare the true costs of mortgage products.
Decide on humanisation
These days, there are several mortgage lenders that provide almost the entire home loan process online. You can apply for a loan, provide all the necessary documentation via email or uploads, and sometimes even do a virtual closing of your deal via the internet.
To some, that will sound great. You don’t have to leave the comfort of your own home. You might feel as though the process is streamlined. Sometimes the electronic mortgage process is quicker.
But some people are more comfortable talking with human beings. If you feel as though you need guidance and advice as you navigate your home loan, maybe it’s better to meet with a loan officer or mortgage broker. It’s an individual decision to make regarding the level of personal attention you want from your lender.
Explain your situation upfront
Just as there can be differences among mortgages and mortgage lenders, not every borrower is the same, either. When you are getting loan estimates from banks, it’s critical to explain your particular circumstances.
Lenders will ask about whether the loan will be used to purchase a home or to refinance, but you should also let them know other specifics. If you’re a first-time buyer, or have less-than-stellar credit, or are looking for a low down-payment option, it’s important to get those things out in the open right away. Make sure your loan estimate is tailored to your specific situation.
Ask your real estate agent
You’re not obligated to use them, and you should still shop around on your own, but real estate agents can often provide lender referrals to buyers. Lenders can’t legally pay referral fees to them, so real estate agents don’t provide such referrals for any financial considerations.
Instead, agents are interested in smooth, fast closings. If they are referring homebuyers to particular lenders, mortgage brokers, or loan officers, it’s likely because they trust them. They believe they know what they’re doing. No agent wants a home purchase to fall through, so they’re likely to point you in a direction they know is reliable.
The bottom line
Not every mortgage or lender is the same, and neither is every borrower’s situation. Advertising low rates is how companies draw you in, but there’s more than just rates when it comes to finding the right lender for you.
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