Choosing the right mortgage lender for your needs is vital and involves far more than simply applying to your current bank. There are many mortgage products to choose from, lenders which offer them and interest rates and fees which can make a dramatic difference to the amount which you actually pay. Searching for the lender who can provide a low interest rate with low fees is necessary to secure the best deal, but you also want a lender who provides good customer service and is approachable.
If you have an idea of the type of mortgage product you want then your first step should be to compare the interest rates they offer on the type of mortgage you need. You can use online mortgage calculators to compare rates against mortgages with different terms which match your credit score. You should consider if you need an ARM or a fixed rate.
The size of your down payment will make a substantive difference as the larger it is the greater the chance of you receiving a lower interest rate. Also bear in mind that for mortgage loans with less than 20 percent equity you need to factor in the costs of mortgage protection insurance, which is an insurance which protects the lender in the case of default.
Mortgages are issued by banks, mortgage companies, credit unions and the federal housing association. You may also consider using the services of a broker to find the best mortgage deals, but this will add to your costs and is probably unnecessary if you are able to research well yourself online. Use online mortgage rate tables to consider various deals.
If you use a real estate agent and seek their advice regarding lenders it is worth knowing that they are not allowed to receive a commission for referrals. It is unlikely that they are best qualified to offer actual financial advice, and you can speak to individual lenders directly regarding their products and services. You should always ask questions and look for a lender who is prepared to take the time to answer them fully and make sure everything is understood.
It is particularly important to know if there are any penalties applied; the level of any caps; and the worst case scenario of what the monthly payment will be. Never judge a mortgage by the monthly payment alone but consider what that payment could rise to in the future as interest rates fluctuate.
When you have narrowed your choice down to several mortgage lenders then you need to apprise yourself of the fees they charge to issue the loan. These can vary greatly between lenders and you should obtain a ‘fair estimate’ figure of the charges which you should ask the lender to break down.
Always be prepared to negotiate the figures down, and the more knowledgeable you are about rival lenders, and their rates and fees, the more successful you are likely to be in getting some of the costs eliminated. If a lender is unwilling to negotiate it does not bode well for any future dealings if any problems arise which require their co-operation, such as with loan modifications.
Choosing the right mortgage lender thus involves a lot of comparison shopping between lenders and their products and rates. If you take the time to understand how mortgages work it will serve you well when dealing with lenders. The right lender is worth researching as the wrong lender for you could end up meaning the difference between tens of thousands of dollars over the term of the mortgage.