Let’s be honest, when buying a home, there are so many things to think about! One of the most complicated decisions you will likely make will be which lender to pick. Today there are tons of lenders out there ready to accept your loan application. But just because a lender accepts your application doesn’t mean they are the right one for you. Since you’ll likely be paying on this loan for years to come, it’s important to make sure you shop around and choose the right lender (and loan) that fits your needs. Here are five tips for picking the right mortgage lender.
1. Decide whether you need a mortgage broker
There are benefits to working with a mortgage broker because they have access to multiple mortgage lenders, which saves you time. However, there are some drawbacks you should be aware of when working with a mortgage broker. They earn their profits by arranging the deal between the lender and the new homeowner. So essentially, they are a middleman, which can work to your advantage, however. Good mortgage brokers will choose from the best performing banks, knowing which ones are most likely to close without a hitch.
If you are someone who prefers more personal customer service and a lender who knows your name, you would likely want to go with a smaller local lender. Some people prefer to get a loan where they are currently banking already, thus keeping all their accounts in one place. This is great for convenience, but this might not get you the best rate and terms. Researching the differences between larger lenders and smaller ones will help you decide which fit is best for you.
3. Ask around
A broker is not the only way to find mortgage lenders. Ask your friends, family members or coworkers who have purchased a home within the last few years about their lenders. Getting referrals from those close to you can help you cut through the sea of prospects to find someone you know you can trust.
4. Talk to your real estate agent
A good agent will not limit recommendations to his or her in-house lenders, and smart loan officers take especially good care of customers recommended by real estate agents. Since real estate agents do multiple transactions per year, that’s multiple lenders they come in contact with!
5. Research the lender’s reputation
No matter how you hear about a lender, it is imperative to do a background check. If you can get names of past clients, make sure you speak with them. Google them, check online reviews and don’t hesitate to bring up any questions you have with a potential lender. Learning as much as possible about who you might be dealing with can save you a number of headaches later on.
Most home buyers don’t realize picking a bad lender can reduce their chance of getting an offer accepted in the first place. In a competitive housing market, listing agents will encourage their sellers to pick offers from lenders with a better known reputation. Sometimes this is the main deciding factor when multiple offers are nearly otherwise identical.
Shopping around for the right mortgage lender can be daunting. There are numerous lenders available and more seem to be popping up all the time. It’s important to know what you’re looking for and to do as much research as possible.
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