Home shopping is fun – picturing yourself and / or your family living and building your lives there can be incredibly exciting!
But, not all shopping is or will be equally as fun.
The first major step to purchasing a home is finding the right lender for you. Yes, we know the financial part isn’t the most intriguing part, but it is one of the more important parts.
Here’s how you find the right lender for you.
Types of Lenders
Traditional Bank: You’ll work with a loan officer who gets a base salary and might receive a small commission or bonus for writing your loan. Some banks might offer a discount if you have your checking or savings account set through them.
Mortgage Bank: These banks will only specialize in mortgages. The loan officer you’re assigned to will likely receive a commission along with his or her salary. These banks might keep your loan or sell it – if they sell it, they can sell the entire loan, which means you might eventually deal with an entirely new mortgage bank.
Mortgage Brokers: Brokers shop across many banks to find you the best rate – they are paid a commission known as a “yield spread premium”, which is available for you to see on your loan estimate.
Check to see if friends and family have any referrals for you to pass off.
Check online to see and compare different mortgage options – but be sure to go further than just “glancing.” The rate you see online – before you apply – has not been tailored to you. Rates are influenced by your credit score and other financial factors, so until you’ve sat down with a lender, you’ll never have the full picture.
And don’t worry – your credit score won’t be hit with these multiple credit inquiries taking place. Multiple-related inquiries made within a single 14-day period count as just one for the purposes of your credit score. They know you’re not going to buy six houses!
After you’ve applied with different lenders, within three days you should get a loan estimate. After you do, compare costs and weigh your options.
Questions to Ask Your Lender
You want a lender that understands your financial situation and can find the best loan to fit your needs. Here are a few questions to ask your potential lender:
- How much time do you need to complete the mortgage? (this is important if you’re on a tight time frame)
- Can I lock my rate? And if so, when?
- How much are discount points?
- What are my options with fixed or adjustable-rate mortgages?
- When will my monthly payment be due?
- How much will my monthly payment be?
- What are the closing costs associated with the mortgage?
- Who can I contact if I have an issue?
Do your research and compare costs! By doing so, you’ll end up finding the right lender for you and your needs.
Want more real estate guides? Check out Alliance Title’s Blog here.