Buying a home is by far one of the largest transactions you'll ever make, so finding the right mortgage company is crucial.
If you're preparing to buy a home, how do you find the best mortgage company for your needs?
This helpful guide explains some of the most important qualities to look for in a good lender, so read on to learn more before you take the plunge.
Understand the Different Types of Lenders
Several financial institutions can issue mortgage loans, but how do you find one that works for you? Large banks can offer you a variety of packages to choose from, but you may not get much in the way of personalized service.
If you're a member of a credit union, they tend to offer their customers low rates, and many will even match the competition. If you're not a member, it's usually free to join with a minimum deposit.
Local banks are another great option since they know the market where you live. Ask for a free consultation and sit down with a few lenders before you decide which one will work for you.
If you prefer to do things virtually, there are also mortgage lenders who process everything online. Just make sure you know what the current rates are so you can compare between all the various banks and other lenders.
Have Your Financial Ducks in a Row
One of the best ways to find a good lender is to know where you stand. Check your FICO scores before you talk to banks so you already know the health of your credit.
Run a free credit report, and look for any omissions or errors. Get those errors corrected before you talk to lenders so everything is already neat and clean.
Calculate your DTI, or debt-to-income ratio. This ratio uses your current monthly costs and compares it with your income as well as your projected mortgage payment.
The DTI will indicate how much home you can afford, which will affect your pre-approval letter. There are plenty of calculators online that can help you determine what your DTI ratio is.
If you need help with how to find a mortgage company, consider using a broker. They can do all the work for you and scour the many lenders out there until they find one with the best rate and terms.
Communication Is Key
One of the most important qualities of a good lender is an open line of communication. If you have questions or concerns, you should be able to contact your lender and get a quick response.
Buying a home can be stressful, so you need someone who's in your corner. A reputable lender will respond to your queries quickly and help you understand the mortgage process.
Most mortgage lenders can be accessed via telephone or email. If you choose to use a local bank, don't be afraid to physically go inside or schedule a personal meeting so you can voice your concerns.
It's important to remember that loan officers are very busy people and that you're not their only customer. On the other hand, you should always be made to feel like a priority while you wait for your loan to go through.
If you can't get answers or it seems to take too long, consider choosing a different lender. When it comes to buying a house, you need a bank or mortgage lender who is easy to get in touch with.
How Do You Find a Lender with Great Rates?
Ideally, you want a mortgage with the lowest possible rate and closing costs. You can shop online and compare a few lenders that way, but most of the time only the big banks will post their rates online.
You should call several lenders and tell them your current credit score, your DTI, and your desired loan amount. This simple information should be enough to get a quote over the phone.
Keep in mind that rates change every day and that your final rate could change before closing. Ask the lenders if they offer a rate lock and how long it lasts. A rate lock will guarantee your quoted rate for a set amount of time.
Some lenders offer free rate locks while some charge for it. Decide if that's an important factor when you choose your lender.
A mortgage broker can shop rates for you, which can save you a lot of time. They'll be able to determine which lender has the lowest rate and the best terms so you can save money.
Don't be afraid to ask several lenders about their rates and tell them you found lower rates elsewhere. Many lenders will match others' rates as long as you have proof of the quote. If you know your current financial standing, you have much better leverage to get the rates you want.
Choose Your Lender Smartly
If you've asked how do you find the best mortgage lender, the answer is simple. Banks and other lenders should give you clear rate quotes, great communication, and a detailed plan for moving forward.
Once you find the perfect lender for you, you'll be able to really enjoy the home buying process. Make sure you shop around and, when in doubt, use a broker who can help you get the most bang for your buck.
For the latest real estate news and trends, be sure to read our posts and visit our website for more information.