After the collapse of a speculative bubble that brought the nation’s housing market to a virtual halt for several years, real estate is beginning to pick up traction. People are buying homes again. If you’re considering becoming one of them, you are wondering how to choose a mortgage lender who’s right for you . Here’s a checklist of things to consider when you’re shopping for the right loan:
• Mortgage Rates:
Research prevailing mortgage rates before you sit down with a potential lender. There are many websites that allow you to compare lenders’ rates; keep in mind, however, that in many cases lenders are paying for promotion on these sites so the information you’re getting is not entirely objective. A better way to approach the research might be to sit down with a list of reputable banks that you might be interested in doing business with, and research those rates individually.
• Mortgage Types
There are as many different types of loans as there are different needs. A good lender will have familiarized herself with your employment history and your credit report, and will not suggest mortgage products that are not a good fit for your needs. Of course, responsibility is a two-way street: you need to understand your own limits as well. (If you are taking home $2500 a month, should you really be considering a $1700/month loan even if the potential lender is enthusiastic about it?)
• Understand the Fee Structure
The cost of a mortgage is not just the rate of interest you will be charged on the money you are loaned. It’s also the administrative costs of doing business: the application fee, the appraisal fee, the closing fee and points, and so on. Lender-related settlement costs can add as much as four figures to the cost of your loan, and they tend to be one of the features of that shows the most variation among lenders. Be sure to request an itemized list of fees when comparing loan costs.
Big is not necessarily better when it comes to mortgage loans. There are many different mortgage brokers out there and the fact that you haven’t heard of some of the smaller companies doesn’t mean they’re disreputable. You will want to do your homework here, however, if you’re considering working with them. How long has the company been in business? Is the company a member of its local Chamber of Commerce? Can the company direct you to customers willing to speak to you about their experiences? (Even better, of course, would be to find someone within your own extended network who’d had some experience with them.)
Increasingly Americans are using online services to meet their mortgage needs. Still, there are times during every loan process when you have questions that an only be answered through dialogue with a human being. When you contact your loan officer, good service means getting a response within 24 hours of your email or phone call. If it takes longer than that, then they don’t value tour business the way it deserves to be valued.
Good service within the mortgage lender context also means that the company you’re working with has your best interests at heart. They do not encourage you embellish your application with little white lies and they do not try to persuade you that you can borrow more than you know you can. They do not pressure you to complete and submit an application form before you feel ready, and they’re always upfront and honest about fees. Their goal as your partner in this process is the same as yours: to find the mot suitable loan for you.