Where Do You Start?
When you're looking for a mortgage loan, where do you start? A number of different entities can provide you with the money you need to buy a home. Here are some lenders to consider when you're looking for the best mortgage rate:
- Most banks also provide mortgages. You'll be assigned a loan officer and get personal service. If you borrow from a bank where you're already a customer, it may offer special rates and fees.
- Credit unions are another option. You need to become a member to take out a mortgage, but then you get members-only deals.
- Look into nonbank mortgage lenders. These online services provide a quick loan turnaround. If you want a Federal Housing Administration loan, nonbank lenders may be more eager to work with you than conventional banks would be.
- Mortgage brokers work with many lenders, searching multiple companies to come up with the best loan option. They act as intermediaries, gathering your documents and providing them to the underwriter. However, brokers earn a fee or commission that you'll have to pay at closing.
- Mortgage marketplaces allow you to review interest rate quotes from multiple lenders. You may find a great rate and a terrific deal on closing fees.
Get all the info
So where do you start? Most lenders advertise their rates, so look up a rate aggregation website that collects and compares rates from lenders in your area. Then talk to friends and real estate professionals for references and recommendations.
Once you get in touch with a lender, make sure you come with a list of questions, including:
- How long do you expect the process to take?
- Will you be my main contact through the processor will someone else take over? How will we keep in touch?
- Will appraisal and closing take place online or in-person?
- How long of an interest rate lock should I commit to? (Many lenders recommend locking your interest rate at the time you file an application so that it doesn't change before closing.) If closing doesn't take place before then, will I have to pay for an extension?
If you decide to work with a mortgage broker, ask these questions as well:
- How many lender quotes did you review, and why did you select this lender and rate as the best?
- What fees and commissions will you charge, and who will pay for them — me, the lender, or both of us?
Compare the interest rates and fees of at least three lenders or brokers. But don't only think about the sticker price. Consider these other criteria:
- Ask about points — fees that may allow you to get a lower interest rate. How much do they cost, and do you need them at all?
- Ask about application fees, underwriting costs, and any fees charged at closing.
- Make sure you get the details on private mortgage insurance. If you put down less than 20%, you may need to pay it, but ask whether there are any ways to avoid it.
The annual percentage rate, or total cost you pay for credit as a yearly interest rate, includes costs like points and mortgage insurance. This will help in considering mortgage offers. You can ask whether a particular lender can beat another's offer, perhaps by waiving or lowering one or more fees or by agreeing to a lower rate or fewer points. Be sure you don't have an agreement to lower one fee while points are being added. Ask your lender whether there are any discrepancies and question any costs or terms.
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Your real estate agent or financial professional may have additional suggestions. R.E. Shilow can connect you with the best mortgage professionals available call us today by clicking the phone in the top right corner!