How to Pick a Mortgage Lender: Everything You Need to Know

Looking to buy a new home?

Picking a mortgage lender is one of the most important decisions you will make when buying a home.

There are so many types of lenders out there like owner occupied hard money lenders, and each one has its own way of doing things. It can be hard to tell who’s good and who isn’t.

But don’t worry! Keep reading because this article will teach you everything you need to know to pick a mortgage lender, including how to find the best deal on your loan and avoid hidden fees that could cost thousands in extra interest over the life of your loan.

1. Contents

   Their Rates

The first thing you need to look at when picking a mortgage lender is their interest rates. Different lenders will offer different interest rates, so it’s important to compare and contrast what different lenders have to offer. It’s also important to keep in mind that your interest rate may not be fixed – it could go up or down over the life of your mortgage.

So, if you’re worried about potential interest rate hikes, make sure to ask your lender about a fixed interest rate.

2. What Typer of Lender Are They?

There are two types of mortgage lenders: banks and non-banks. Banks are traditional lenders who offer a wide variety of products, while non-banks typically specialize in one type of product (like mortgages). So, when picking a mortgage lender, it’s important to decide which type of lender is best for you.

3. Do They Have Terms to Suit You?

Different lenders have different terms they extend to clients. Terms can range from being able to pick a fixed interest rate, all the way up to being able to choose your closing costs. Be sure to take a look at what different lenders’ terms are, and decide which one is best for your situation.

4. What Fees Will You Pay?

Mortgage lenders will charge you a variety of fees, which can include application fees, processing fees, underwriting fees, and more. So, before signing on with a particular lender, be sure to ask about all the different fees they charge. This will help you make an informed decision about which lender is right for you.

5. How Much Can You Afford?

Your mortgage lender will need to know how much money you’re able to borrow in order to get a mortgage. This is known as your loan-to-value ratio (LTV). Lenders typically want your LTV to be below 80%, so be sure to find out what your LTV is and whether or not the lender you’re interested in works with this ratio.

Also read: 5 Tips To Improve Your Eligibility And Get A Personal Loan Approved

6. Do They Have Good Customer Service?

The mortgage process can be stressful, so it’s important to pick a lender with good customer service. This allows you to work with someone who is helpful and easy to get in touch with if you have any questions or concerns while going through the mortgage process.

You may even want to ask your friends for recommendations about which lenders they found helpful during their own home buying process.

7. What Are Your Options?

Different lenders will offer different products, depending on what your goals are. Some lenders only offer low-downpayment mortgages, some specialize in refinancing, etc. Make sure to go over all of your options before committing to one particular lender, so that you make an informed decision.

8. What’s Their Reputation?

Last but not least, go over a lender’s reputation by doing some research online and talking to friends who have recently bought their own homes. Make sure that you always get references from any potential mortgage lender and take time to read online customer reviews.

If they have a lot of bad reviews then stay clear. However, you always have to take online reviews with a pinch of salt. This will help you determine whether or not they’re worth working with, and it can help you avoid any issues down the road.

9. Consider a Broker

If you’re not sure how to pick a mortgage lender out of the different lenders available, consider hiring a broker. A good broker will be able to offer guidance and find the right product for your needs. They’ll also be able to help you understand what different lenders are offering in terms of products, rates, fees, etc., which can make it easier for you to select one.

10. How Quickly Can They Close?

Another thing to consider when picking a mortgage lender is how quickly they’re able to close on a loan. Some lenders are faster than others, so it’s important to factor this into your decision-making process.

11. Get Pre-Approved

Before you start working with a particular lender, we recommend getting a mortgage pre-approval. This will let you know exactly how much money you’re able to borrow and what your mortgage rate will be before you commit to anything, allowing your search to be more targeted.

12. How Will You Pay?

Your mortgage lender needs to collect the funds that they’ll use for your loan in a specific way – either through wire transfer or check. So make sure to consider both options before committing to one of them, as it’s best practice to have the funds ready upon closing on your home purchase.

13. What Paperwork Do They Want?

Another thing to consider when deciding on a lender is what paperwork you need to provide in order to get pre-approved, as each lender will have different requirements. This can vary from one geographic location to the next and it’s important for you to know your stuff so that nothing falls through the cracks and prevents you from getting approved for your home loan.

Want More Advice on How to Pick a Mortgage Lender?

We live in a complicated world with many choices. As you begin to search for the right mortgage lender, it’s important that you are armed with all the information necessary to make an informed decision. This blog post has provided some of our best tips on how to pick a mortgage lender and why this is so important before making one more major financial commitment.

If you’d like to learn more about the rates for mortgages, please visit our blog!