When it comes to purchasing a home or refinancing a mortgage, borrowers can be spoilt for choice by the large number of competing lending companies. Mortgages are available from traditional banks, mortgage companies, brokers, the Federal Housing Administration and credit unions. It pays to find a lender who offers a professional service and can take time to answer any questions pertaining to the mortgage loan. Good customer service from a lender with an excellent reputation should be a key factor in determining the chosen lender.
Comparison shopping between lenders is vital to secure the lowest interest rates and fees. It helps if the intended mortgage product is decided on in advance so that comparisons are made against the same type of product. Those unsure of the best type of mortgage for their needs should have their queries answered by professional companies, and thus decide if a fixed rate or adjustable mortgage rate is right for them, taking into account the term of the loan.
Headline interest rates are by no means the only consideration when selecting a mortgage company. The fees charged need to be known in advance, along with the expected closing costs. It is prudent to rule out any company which refuses to be upfront about their fees or attempts to hide them. A reputable lender should be able to list their fees so these can be taken into consideration along with the interest rate. At the very least they should provide a fair estimate.
Fees can vary greatly between lenders and should ideally be open to negotiation. A lender is more likely to negotiate if the borrower is aware of fees and interest rates on offer from other lenders, as it demonstrates knowledge of the market.
Many people choose to use a mortgage broker to find their mortgage, but this can be an unnecessary expense for those able to comparison shop with some knowledge of mortgage loans. Brokers will require a commission payment which will increase the expense, and this can be avoided by comparison shopping. Mortgage rates are published on the Internet, by individual lenders, and advertised in the newspapers.
Once several lenders have been narrowed down, it pays to check their reputations, how long they have been in business and if they have complaints registered against them. A reputable mortgage company can be checked out via the Better Business Bureau. It pays to be cautious in steering away from sub-prime lenders and concentrate on those with a good track record.
Borrowers are best advised to obtain a pre-approved mortgage if house hunting, and there is no restriction on applying to several lenders. However it is best to avoid those with high mortgage application fees, which are an unnecessary expense. If several applications are made, they should be done in the same time period to avoid unnecessary hard inquiries on one’s credit reports.
Ultimately, when rates, terms and fees are all taken into consideration, it is still important to have confidence in an approachable lender. Mortgages are long-term financial investments, and it can be helpful to know a lender is approachable, in case there comes a point when there are any difficulties with the loan.