When you get to the point where you’re financially stable enough to start shopping for your own home, it’s an undeniably exciting feeling. You can’t allow all that excitement to cloud your judgment though.
As exciting as it is to start shopping for a new home, you will likely have to look for a mortgage lender first. This is where many people tend to make mistakes as they don’t take the time to carefully search for a lender that works best for their current situation.
Authorities in the lending industry such as August Funding understand just how crucial it is for a borrower to find the right lender. While the different types of lending carry their own risks and regulations, lenders across all industries should meet the same criteria to demonstrate their trustworthiness.
If you’re in the market for a mortgage lender, please read on so you can find out the characteristics that define the ideal lender.
1. A Lender Must Have the Right Registration and Reputation
There are people out there seeking a lender who are not very familiar with the way the whole system works. Due to their inexperience, they may hear about a lender offering very low interest rates and immediately assume that they’ve found the company they wish to do business with.
As always, if the offer sounds too good to be true, it probably is.
You should first check via the Nationwide Multistate Licensing System Registry to see if the business you’re talking to is actually legitimate.
While you’re at it, go ahead and look them up online too. This will allow you to see what previous clients have to say about their services. That should also provide you with the additional info you need to determine if the lender is worth your time.
It’s best to find out the truth regarding a lender early on as opposed to investing the time and just end up having it wasted.
2. A Lender Should Be Comfortable with Your Credit Score
Your credit score always seems to come into play whenever important financial transactions are being discussed. That’s still the case when it comes to finding a mortgage lender.
However, Experian notes that not all lenders have the same standards when it comes to credit scores.
Some lenders will not consider your application if your credit score is not up to their standards. Others are a bit more lenient and will continue to work with you even if your credit score cannot be described as good.
You’ll obviously have an easier time finding a lender with a good credit score, but a bad one by no means disqualifies you from securing a mortgage.
3. A Lender Should Be Able to Offer Competitive Rates
Now it’s time for you to find the lender offering the most borrower-friendly rates. This is likely going to be the most time-consuming part of your search.
The Federal Trade Commission reminds you to ask plenty of questions regarding the rates offered. Ask if you are being offered the lowest rates and also check if the rate is adjustable or fixed. While you’re there, make sure to inquire about the annual percentage rate as well just so you can get a better long-term view of what you’re signing up for.
It doesn’t end there. Once you’ve determined what rate you can get from one potential lender, you need to put in the legwork and see what others in your area may offer.
This is not going to be easy work, but it’s what you need to do to ensure that you get the best possible deal on something that could shape your financial future.
4. A Lender Should Tell You about the Fees You Will Have to Pay
Fees are inevitable when it comes to taking out just about any type of loan. You may not like them, but you have to learn to deal with them.
Prior to affixing your signature to any paperwork, go ahead and ask about all the fees you will have to pay moving forward. Don’t hesitate to ask what a specific fee is for and if it’s something that will pop up continually.
You’re not getting rid of any fees that way, but at least you’re better prepared for them.
Also, if your lender is willing to negotiate, focus on the fees instead of the rates. The lender may be more amenable to waive a fee or two if it means that you’ll agree to sign the deal as soon as possible.
5. A Lender Should Allow You to Lock in the Deal
The last thing you should seek from a lender is a willingness to let you lock in the deal you negotiated.
Don’t just secure a verbal agreement. Get the agreement in writing and make sure that it clearly states the terms you have agreed to.
The downside to locking in your deal is that you may be unable to benefit if rates become more favorable. There is definitely some risk involved here but securing a deal you like is a good move too.
Financial authorities like August Funding know all about how difficult it can be for consumers to find the right lender. By considering the things listed above though, you should be able to identify the lender who can make it easier for you to finally purchase your dream home.