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Choosing a Mortgage Lender

It’s a seller’s market and the best way to arm yourself with some excellent negotiating tools is to become pre-approved before you start working with a Realtor. But before you begin researching lenders, get your credit report! You can do this free through Credit Karma, you’ll want to avoid being surprised by any unknown information your lender might find. Be sure to take the time to get any collection accounts paid and dispute any incorrect information that may be reporting. Only after this is done should you begin your lender search.

Ask for referrals from friends, family and co-workers

This is an easy, simple way to find a good, reputable lender. Find someone you know and trust who has bought or refinanced a home recently and ask who their lender was and what their experience was like. Just keep in mind that no two transactions are just alike and if your friend got into a great low interest program with a particular lender doesn’t mean you’ll be able to get the same deal.  Ask more about the lender themselves and the customer service they provided during the transaction.  Keep in mind, it’s the lender’s responsibility to learn about your personal financial situation and help direct you to the loan product that best fits your needs. They also will be the one to keep you (and your Realtor) informed about the progress of your transaction. If you reach out to a lender that you have been referred to and they don’t return your call or emails promptly, you may want to move on to someone else.

“Interview” or “screen lenders”

The mortgage lending business is hyper-competitive and mortgage originators come in all forms of education, training, experience and affiliation. There’s a lot of ways to interview lenders and a great place to start is with the bank where you currently have deposit accounts. Many financial institutions will offer discounted rates to existing customers. Next, check out some profiles on-line to get a feel for what a lender’s expertise is. Specifically, if you are a first time homebuyer you’ll want to find a financial institution and lender who have a lot of experience with a broad range of first time home buyer products and perhaps some programs targeted to specific populations such as VA and Rural Development loans. Trained and experienced lenders should be able to help borrowers select appropriate financing options and find the best rates. This type of research will save you thousands of dollars in the long-term.

Local lenders versus on-line financing

If you are a first time home buyer you may want to strongly consider utilizing the services of a local lender; one whom you can meet with in person and who will likely give you more individual attention.  However; that being said, we are in an electronic age and there are also many good lenders that you can work with by telephone and email.  You definitely want to find a lender who is willing to explain the things you aren’t familiar with and help you to make educated decisions such as determining not just how much of a loan you can qualify for but also how high of a payment you’re comfortable with. As a first time home buyer the first clue that a lender will be able to work more closely with you is one who has a website that includes educational information as well as advertising the products they have to offer.  This indicates that the financial institution as a whole really wants what’s best for you and isn’t just focused on increasing their volume and making a buck.

Available loan products

The same mortgage products are not available from all lenders so if you’ve done your homework and know what program you are looking for, make sure the lender you choose offers it.  The same goes for any grants or special programs, each lender offers different products. When you do find the same product with multiple lenders you’ll want to get more information about their “offer”.  In order to compare apples to apples take a look at the APR (Annual Percentage Rate), this differs from the regular rate as it takes into account all the fees associated with the loan. Keep in mind that the APR isn’t the only thing to consider,

Finding a lender is one of many steps in the home buying process, take your time, do your research and find someone you can trust and that best suits you and your situation.

 

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