If you’re planning to buy a home, then odds are you’re going to have to take out a mortgage. Very few people are financially capable of paying for a house out of pocket, after all. When you go to a lender to apply for a mortgage, it’s important that you understand that terms and conditions are going to vary from one lender to the next. It’s why you should compare different lenders. The following are seven questions that you can ask yourself before you choose a mortgage lender.
More often than not, you can find a reliable lender by asking someone you know for a referral. Ask friends, family, and coworkers who have bought a house in the past if they used a lender that gave them good terms and that they trust.
You will want to make sure that the lender you decide to borrow from is reputable. There are a lot of predatory lenders out there, after all. There are a few places where you can look into a lender’s reputation, including the Better Business Bureau, the National Association of Mortgage Brokers, and the Nationwide Multistate Licensing System Registry where you can check to see if the lender you are considering is registered in your state.
There are many types of lenders you can choose from, including local banks, big banks, online lenders, credit unions, and private lenders. Each has its own set of pros and cons. For example, you’re probably not going to get the in-person support you’d get from a local bank with an online lender.
If saving time is important, consider a mortgage broker. You’ll pay more in fees, but they can quickly help you identify an ideal loan type based on your financial situation so that you don’t spend a lot of time researching lenders and their loan options.
The interest rate that a lender offers will depend on a variety of factors, including your own income and your own credit history; however, it’s still going to vary from one lender to the next. It’s important to understand that even a 0.5 percent difference can end up being a significant amount of money over the long run. A half a percentage of interest could end up costing tens of thousands of dollars more. As such, the interest rate is one of the most important terms to pay attention to.
Be very careful about the advertisements you see for mortgage lenders. They often use tricky language, such as “interest rates that are as low as…” Just because a lender advertises that you could get a really low-interest rate doesn’t mean that you’ll qualify for that interest rate. They won’t be able to offer you a set rate without your financial information, after all.
The terms and conditions that a lender offers aren’t necessarily set in stone. If you’ve spent the time to go to different lenders, you will be offered different terms and conditions from each lender. You can then use the best terms and conditions you received as leverage in order to negotiate; after all, every lender wants your business.
If you need to apply for a mortgage, then it’s important you find the right lender that will fit your specific needs. Make sure that you do your due diligence and ask yourself these questions as you compare lenders. For more information about applying for a home mortgage, contact us at Equibox Mortgage today.