Home prices have witnessed a record high, hitting 48% increase since 2011, which has led to affordability challenges for most Americans. The high cost of owning a home has led people to opt for mortgages. With a mortgage plan, you can afford your dream home with minimal hurdles.
Choosing a local mortgage lender is probably one of the most complicated decisions for a potential homeowner. Today, many mortgage lenders available are more than willing to give you a loan. You’ll probably be paying the loan for years, and you don’t want to get stuck with a rogue mortgage lender.
So, the time has come to pick the best local mortgage lender to secure the home you’ve always dreamt for. But how do you choose? Check out this blog for more insights.
1. A Local Mortgage Lender or a Broker?
A mortgage broker operates differently from a mortgage lender. You should understand that a broker acts as a middleman. With the experience and skills of a broker, you can secure a better mortgage deal.
Besides, a broker saves you time that could have been spent finding reliable lenders. When dealing with a mortgage broker, you need to be vigilant because most brokers will prioritize their profit at the expense of getting you a friendly mortgage deal.
A mortgage lender is the institution loaning you the money. These institutions may include banks, credit unions, and correspondent lenders. Dealing with a local bank is among the preferable options that can guarantee you a face-to-face and familiar experience.
If you want to land a quick deal, a small bank can be an ideal mortgage lender. Small banks are less rigid, mostly because they make in-house decisions.
2. Ask Around
You’d hardly go wrong with referrals. Identify friends, colleagues, or family members who have bought a home recently. Such networks can direct you to reliable mortgage lenders. Your close associates will give you negative and positive reviews of several local mortgage lenders.
Consult with your real estate agent for genuine recommendations. Lenders hold realtors in high esteem, and they are likely to give you exceptional customer service if referred by your real estate agent. Use the connection to your advantage; it can even help in cost reduction.
3. Get a Mortgage Pre-approval Letter
Before you apply for a home loan, get your documents ready. Obtaining a preapproval letter gives you an edge when looking for lenders and potential home sellers.
A lender will require you to provide your social security number and that of your co-borrowers. You will also need to deliver savings, investment, and bank account information. Lenders further need details about your employment, salary, tax returns, and debt obligations.
Preapprovals from different lenders will allow you to make an informed comparison. Check the terms and the rates to know the best local home lender. A preapproval will also help you save time later when processing the actual loan.
4. Vet Potential Mortgage Lenders
Rogue mortgage lenders are on the rise. You will need to watch out for such predators before they turn your dream of owning a home into a nightmare. It is crucial to vet all referred or identified home loan lenders.
The Multistate Licensing System Registry will notify you if your mortgage lender has a valid license. Dealing with accredited lenders will give you a greater sense of security.
Your due diligence should also involve conducting thorough research on trusted mortgage lenders. When shopping for a mortgage online, some scammers can try to entice you with suspiciously low rates.
Forged reviews make it even harder to know reliable lenders. If you are unsure of your vetting prowess, consider working with experienced brokers.
5. Compare Rates
Mortgage rates differ from one lender to another. The price quoted online is just an estimate. Your credit information determines the actual rate. Your credit health should be in an excellent state to qualify for a home loan in the first place. Local mortgage companies can use your credit score to establish your loan worthiness.
If your credit score is satisfactory, you can have an edge when dealing with a mortgage lender. Have quotes from different companies and compare the costs to determine the deal that complements your financial standing.
Negotiate for better rates based on the information you gather. Ask hard questions; you will have a better deal when you are more prepared.
Note that a suitable mortgage is not solely about low rates. Yet, you can save hundreds of thousands when you research right. The information will allow you to evaluate lenders and determine whether the experience is worth the investment.
6. Understand all the Involved Costs
If you think that the rate is the only fee to consider when looking for a mortgage lender, you are wrong.
You’ll encounter a variety of charges that might throw you off the balance if unprepared. The processing fee is unavoidable, especially when dealing with brokers. You can negotiate for a waiver as some brokers don’t demand processing fees.
Brokers will charge you origination fees aimed at covering the effort and time used to source for a mortgage lender. While working with a lender can save you from such costs, the benefits of a broker can’t be ignored. You will also pay application fees to help in retrieving your credit report.
Depending on the company you select for a home loan, the underwriting fee can be low or high. The fee is for the lender after funding a loan.
A lock fee can be necessary to save yourself from fluctuating interest rates. Once paid, a lender can’t change the interest based on external economic factors.
The expenses vary from one lender to another. Ensure that you study all the costs keenly to avoid last-minute pressures.
Getting a Reliable Mortgage Lender Can Be a Challenge for Aspiring Homeowners
Finding a home loan is probably one of the financial decisions you need to think over.
A local mortgage lender can prove to be an ideal option because of the streamlined services. However, you will need to research and scrutinize all the identified companies to land an exceptional deal. The information you gather will be your armor against unscrupulous lenders and exorbitant rates.
For all your inquiries on mortgage lending, contact us.