How To Determine What Mortgage Lender To Go With

The good news is that there will be no scarcity of banks, online lending agencies, and brokerage firms willing to accept your loan request.

Here’s all you need to know about selecting the best mortgage company for you.

Individual Shopping

There are numerous companies that provide low-cost mortgages. Mortgage banking institutions, loan affiliations, brokerage firms, and savings nonprofits are among the most prominent.

Since lending institutions have varying mortgage rates, you have every reason to shop around for the best offer.

One way to do individual shopping is to have a realtor accompany you.

Realtors who have been in business for a long time have proven experience finding the best lenders. Besides, they could have a list of lending institutions and client referrals from their past work.

The internet also offers an easy way to find mortgage lenders. There are reliable websites that deal in mortgage shipping. You could also ask your friends for any mortgage listings found over the web.

Another way of finding lenders is to check for interest rates published in the property column of a newspaper. Such tables may be a good starting point to call the lenders and clarify the listed rates.

Mortgage Brokers

Brokers act as middlemen specializing in mortgage shipping, although they have no direct affiliation to mortgage banks.

They can help you understand various mortgage options, select the best, and help you through the required paperwork.

In addition, a mortgage broker can help as follows:

• Polishing Your Application - If you have a bad credit standing, a licensed broker can modify your application and steer it to the right lender who will grant your application.

• Negotiation on Unusual Property - Lenders sometimes avoid giving home loans on any unusual property. Such property includes cooperative societies or real estate under tenancy in common. An agent comes in handy to help you strike a deal.

Commission for Brokerage

Most brokers deliver on their promise; hence they charge a commission for their services. If you opt to work with a mortgage broker, be sure to give up 0.5%-2% of your mortgage as brokerage fees for smaller loans.

Larger loans, however, have negotiable rates for the brokerage charges. Be sure to ask the broker how much you’ll pay to find a suitable lender.

Furthermore, some mortgage agents get a yield spread payment. It is an undisclosed payment that the lender may charge you on behalf of the broker.

Under the Good Faith Estimates doctrine, the law allows you to receive an estimate within three days of submitting your mortgage application.

Questions To Ask a Broker

Like stockbrokers and car sales agents, mortgage brokers are middlemen in business. Therefore, before closing a deal, be sure to understand their terms of service.

The following essential questions will help you know if you hired the right broker:

• Does the broker work with multiple lenders? Ask the brokers if they have any formal approval from banks for representation. Some may have, while others may not have. Some brokers also have the lazy habit of working with a single lending institution. A single institution may be disadvantageous because it denies you the chance to compare rates from various banks.

• How knowledgeable is the broker? A good broker should understand various loan programs and how they work. Based on experience, they can explain all the essential features you should know. Something may be fishy if you meet a broker who quickly brushes over the features without concrete explanation.

Qualities of a Good Mortgage Financier

The mortgage market is full of many lenders who offer attractive packages to lure prospective buyers. But not all lenders are good.

Some are dubious institutions that may subject you to hefty, undisclosed charges after you close your agreement.

As you interview potential lenders, look out for those with the following traits:

• Licensed - Since the 2011 passing of the Mortgage Licensing Law, all lenders should have a valid, national license. As a prerequisite, owners of companies issuing residential loans should have the relevant training, undertake a written test, and pass a background check. Additionally, they should possess a valid credit report. So before you close a loan, ask the issuing officers if they have a valid license. Without it, they shouldn’t offer residential loans.

• Straightforward - A suitable lender is straightforward in explaining their products without doublespeak. They’ll give you a simple and easy-to-understand comparison of all their loan offers. Financiers who use jargon to downplay your questions and inquiries may be potential scammers.

• Local Approvals - Some banks may send you to affiliate corporates in neighboring towns for approval. But a suitable lender approves your loan locally. They work with local realtors and appraisers to ensure you get support in the right time frame. Local approval also cushions you against last-minute denials that arise from inadvertent omissions of the required information.

• Market Savvy - A suitable lender understands the real estate market and can direct you to the right product. They should have enough experience acquired from many years of practice.

• Competitive - Good lenders will allow you to compare prices, rates, and loan terms with their competitors. As a result, they will restructure their premiums and interests, or grant you the terms you wish to have.

• Keen on Details - A good loan financier has keen attention to fine details. They keep you informed at every step of the loan process and notify you of any changes. They will promptly alert you to avert last-minute disappointment if you miss some vital information.

How To Find a Good Lender

Are you searching for a trustworthy lender for your home purchase?

Consider your local savings bank, building society, mortgage banks, online lenders, and brokers as possible options. Once you’ve decided which deal is best for you, file an application.

As long as your documentation is in order, you can look forward to closing the loan and relocating into your new residence.