4 things to consider when choosing a mortgage lender

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Choosing a mortgage lender is a process, but it doesn’t have to be complicated. Here are four main ways to determine if a lender is right for you. (iStock)

While the pandemic has resulted in many negative consequences for the economy and personal finances, the housing market is an industry that has brought several benefits to families in the past year. When the Federal Reserve cut rates over a year ago, it subsequently had a domino effect on mortgage and refinancing rates, causing them to fall below 3%.

According to Fannie Mae’s Q4 Mortgage Lending ReviewConsumer demand for mortgages and new mortgages increased from 55% in 2019 to nearly 70% in 2020. While this is still a great time to get a mortgage or refinance, it is just as important to choose the right lender for your needs, just as you would for a car loan, personal loan, or student loans.

DOES A NEW CREDIT CARD AFFECT MY MORTGAGE APPLICATION?

Choosing the wrong lender or type of mortgage can easily cost you hundreds of dollars a month, so the following key factors need to be considered when choosing the right mortgage lenders for your home loan:

  1. Price
  2. Technology
  3. Service
  4. Loan officer versus broker

You can start by using Online tools Credible Find the best mortgage rates and prequalify your home loan in minutes. Let’s break down a few tips on how to find the right mortgage lender for you in the home buying process, whether you’re looking for a USDA loan, a matching loan, or others.

Price

The total cost of the mortgage is an important metric to consider when choosing a lender and loan products. While you can control how much money you put in, other expenses like interest, taxes, and insurance will affect the price of your real estate loan.

For example, if your down payment is less than 20%, you will likely need to take out private mortgage insurance to help cover the lender if you are unable to make your mortgage payments for whatever reason.

“Many lenders charge a loan disbursement fee of about 1% of the loan amount,” says Lauren Howard, founder of Prime Plus Mortgages. “Not to mention, there are also closing fees or title payments that can affect your principal balance sheet and overall mortgage costs.”

CONSIDERING MORTGAGE REFINANCING? 2021 MAY BE BEST TIME TO GET ONE

Howard also mentioned how much of these costs are included in your total loan amount or must be paid upfront at the close of the deal. As a result, it is best to get accurate figures from lenders regarding their commissions and look for the most favorable terms. Credible can introduce you to several mortgage lenders and provide you with personalized rates in minutes

Technology

With modern technology, getting a mortgage should no longer be such a tedious process. While you may still need to fill out a lot of paperwork, most lenders now allow you to do this online and conveniently file documents through the lenders’ online portal.

However, there is still a technological gap between mortgage lenders. Some companies have made it easier to collect documents and issue loans, while others still use paper documents and process them more slowly, manually.

Check with lenders in advance to find out how they accept paperwork and process loan application details when narrowing down your choices.

Service

It is important to understand that your chosen lender may not service your mortgage after closing. The Mortgage Service is the person who owns your mortgage loan to whom you make payments.

Chris Birk, Director of Education United Veterans Housing Loans stated: “Service is essentially everything related to the life of your mortgage after closing, including collecting monthly payments, ensuring proper escrow for property taxes and homeowner insurance, and addressing loss mitigation issues.”

Birk added that some lenders may sell your loan immediately after closing, while others may hold your loan for years and then sell it in the future.

DOES MORTGAGE REFINANCING REDUCE YOUR CREDIT ACCOUNT?

While what happens to your service does not affect your interest rate or the terms of your loan, you can ask your lender if they provide in-house mortgage services if that matters to you. During the mortgage process, you can build relationships with loan officers. If you really like your lender and have chosen him on purpose, it makes sense to keep the mortgage with him if possible.

Loan officer versus broker

There are so many different words and names used in the mortgage process. One thing that can be a little confusing is dealing with a loan officer and mortgage broker. They are both not the same thing. A loan officer usually only offers mortgage options from the financial institution he works for. A mortgage broker acts as a matchmaking between you and a number of different mortgage lenders.

Mortgage brokers may charge additional fees as they help you shop. With a loan officer, you don’t pay any commissions as you probably decided you were getting a mortgage from their financial institution (or bank).

GET A JOINT MORTGAGE? HERE AS YOUR CREDIT INDICATOR FACTORS

Credible does not charge any fees to help you shop and find the best mortgage lender… It is important to compare rates and conditions before choosing one lender. Even if you have heard good reviews about a particular lender, it is often best to compare all the options before making a decision.

The essence

Choosing a lender is a process besides considering different types of loans, but it doesn’t have to be complicated. Determine what you are looking for and what is important to you. Be aware that additional fees, fine print, and other factors may affect your experience.

Also required visit Credible to pre-qualify for your mortgage and find the best lender for you. In just three minutes, Credible can help you find the best lenders and mortgage rates to choose from without pulling out your credit report.

Have a financial question but don’t know who to contact? Write to a safe money expert at moneyexpert@credible.com and your question can be answered by Credible in our Money Expert column.

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