How to Find a Mortgage Lender
Often the only factor people consider when choosing a mortgage lender is finding the lowest interest rate and fees. Of course, financial considerations are critical and you certainly should consider the different rates lenders offer on comparable loans, but you also want a lender you can trust, and someone you can work with effectively. Here are some suggested steps to find a mortgage lender:
1. Get referrals from family and friends who have bought or refinanced a home recently.
2. Talk to the lenders. Call or visit the lenders on your list. This will give you an initial feel for what it will be like to work with them.
3. Compare rates for similar loans. Among the things you’ll want to discuss with prospective lenders are the loan programs and rates they offer. But when comparing rates between lenders, be sure the rates are for comparable loans — and remember to include fees and other costs.
Get Acquainted with Types of Financing
The first thing to do is find out what the current rates are. You can get this information online or from your real estate agent. When comparing rates, you need to look at the annual percentage rate (APR), which includes interest, extra fees and costs amortized over the life of the loan. You should become familiar with the various types of loans available; fixed rate, adjustable rate, government-backed loans (FHA and VA), assumptions, blended loans, and more. FHA loans, for example, allow first time buyers to put 5% or less down. Check how rates are calculated (fixed versus variable), and whether charges are fully amortized over the life of the loan, or whether you’ll have to pay points up front and/or balloon payments at the end. Is there a prepayment penalty clause?
Finding the Right Kind of Mortgage
Which loans are best for you depends on such factors as:
• Your current financial picture;
• Potential changes in your finances;
• What your length of stay in the home will be; and
• Your comfort level with having your mortgage payment change from time to time.
For example, if you only plan to reside in the home for a year or two, starting with a lower Adjustable Rate Mortgage (ARM) might be the best choice. If you have no plans to move, and feel that inflation will rise rapidly, a fixed rate would obviously be better. The best way to find the “right” answer is to discuss your finances, your future plans and financial prospects, and your preferences frankly with a mortgage lender.
I am here to help!
Aundrea Beach-Greco
NMLS 333739