5 Things To Consider When Selecting A Mortgage Lender

Choosing a mortgage broker is an important decision when buying a new home. You want to ensure that you are working with a quality mortgage lender in order to save a lot of money on your mortgage over time with a competitive rate that you can afford. Buying a home is a huge investment–probably one of the largest you will ever make. Take the time to do it right and explore a variety of options. It is important to find out the information to these 5 things before choosing a mortgage lender to work with in order to protect yourself and feel completely well educated.

  1. First, find out how much your monthly payments will be each month. Knowing this number will help you to set money aside each month and budget appropriately. Also, it will help you to determine, up front, if this is a feasible and realistic monthly payment for you and your financial situation. You will likely be making this monthly payment for a minimum of 15 years before it is all paid off, so make sure it is something you can handle.

  2. Next, ask about interest rates. Especially in this market, interest rates are often quite high. Each percentage of interest can mean lots of money you will have to spend each year, so try to find the lowest rate possible while maintaining quality service from your lender. Compare interest rates between different lenders to get a feel for the market condition and to find the best deal possible. Be aware that many lenders, especially in online formats, will inflate their interest rates tremendously for the sake of convenience and speed. Beware. The convenience that these lenders provide today will likely back fire and result in a decision you will regret later on when you are locked into paying ridiculously high interest rates each month.

  3. Find out about points. A point is the amount you will pay up front in addition to your monthly interest payment each month. The more points, the more money you will have to put down up front in order to get the mortgage. This can be extremely difficult for individuals who are short on cash or who have money tied up in other investments. Points can really be deal breakers for soon-to-be homeowners.

  4. Next, your credit rating will influence which lenders are willing to work with you. This may narrow down your selection pool depending on your score. It is important that you have a good, solid credit score because this shows lenders that you are reliable. Build good credit over extended periods of time by paying bills and credit cards off in a timely manner. Also, avoid any large purchases such as buying a car right before you are considering taking out a mortgage. This is a red flag for lenders. They worry because you will now be paying back a debt to cover your car in addition to their interest payments for your mortgage each month. Even if you know you can handle both debts financially, lenders will potentially hold or terminate your mortgage application.

  5. Finally, you need to like the person or company you will be working with to receive a mortgage. Take note of how the lender greets you, explains information to you, presents options, and listens to your needs. You should feel comfortable with this individual and the company as a whole before proceeding with any mortgage loan agreement. For additional security, look into reviews of the lender online with sites such as Zillow so that you can read about other customer’s experiences with this lender.

When searching for a mortgage lender it is necessary to go into the process prepared. Be sure to compare interest rates on a site like www.ratesupermarket.ca/mortgage/heloc-comparison/ or by visiting and talking to different lenders. In addition you should find out about monthly payments, points, interest rates, and your credit rate. Finally, be sure you feel like you have a positive, professional relationship with your lender before proceeding so that you can feel confident and informed about your decision.

Categorized as Finance

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