Finding the best mortgage loan is about more than just securing the lowest interest rate. It’s also important to make sure you’re comfortable with the company that’s originating the loan. Although many parts of the mortgage process are the same across all lenders, there are some differences that can affect the fees you are charged and the service you receive that are worth considering when you shop around.
Where Can You Get a Mortgage?
There are many companies that can help you get a mortgage loan. You could consider a local bank branch where you have a savings account, an online lender or a mortgage broker that works with many lenders. Lenders that accept your application and lead you through the mortgage process up until closing are loan originators. Once you close on a mortgage, the loan might be sold from the loan originator to another company, which will then be in charge of collecting payments from you.
Mortgage loans are part of the portfolio of services at banks, which also offer checking and savings accounts, other types of loans and possibly investment services. You can apply in person or online at a bank and will be assigned a loan officer. You might prefer this option if you already have accounts at the bank and want to get personal service from a community bank or local branch of a larger institution.
There are more than 5,100 federally insured credit unions in the U.S. ranging from small lenders to multi-state operations. Like banks, they have a variety of financial offerings including savings and checking accounts and more than half of the loans they issue are mortgages. To get a mortgage loan with a credit union, you need to be a member, which usually means you have to have a “common bond” with others. For example, you could have a family member who is a member, be required to live in particular geographic areas or need to have worked at or retired from companies or governmental agencies connected with the credit union. You might prefer credit unions to other options because of their personal service and members-only deals.
Non Bank Mortgage Lenders:
More mortgages are issued with non bank mortgage lenders which include companies that offer their services exclusively online than other options. These companies might specialize in just mortgage loans or offer a few types of loans in addition to mortgages. One advantage of working with one of these lenders is speed some of the largest online mortgage companies in the country have built their brand on quick loan turnaround. Also, if your credit history has some blemishes or you need a non-conventional loan such as an FHA loan non bank lenders might be more likely to work with you than a conventional bank.
How to Find the Best Mortgage Lender
It is easier than ever to find a mortgage lender. Mortgage rates are readily available online on lender and rate aggregation sites, and many lenders aggressively post ads with their rates as a way to draw you to their website. The banks or credit unions where you have accounts are good places to start on your mortgage loan search, as they might offer special rates and fees for customers. It’s also easy to search online and find lenders as well as websites that aggregate information including ratings about top mortgage brokers and lenders. Finally, talk to friends and real estate professionals for references they might be able to suggest a lender or broker that they’ve worked with and can recommend.
How to Compare Mortgage Loan Offers
Before you settle on a winner, it’s important to compare interest rates and fees offered by at least three lenders and/or brokers so you can be sure you have the best deal. Here are a few ways to compare the offers:
Interest Rate: This is the most obvious way to choose between lenders, but it shouldn’t be your only determining factor. Keep in mind that rates change daily, so you’ll want to be sure you have the right lender before you lock in a rate and finalize the application. Also ask about points, which are fees that may allow you to get a lower interest rate. Find out how much they cost and whether you need them at all.
Fees: There are a variety of fees associated with a mortgage loan. Not all of them are clearly understandable. Some lenders might list the fees individually while others lump them together. Ask about all of them including application fees, underwriting costs and others that are charged at closing. Compare between lenders and negotiate as many of the fees as possible.
Down Payment and Mortgage Insurance:
You’ll want to put down as much money as possible on a mortgage loan, but also make sure you’re saving for the inevitable home expenses such as repairs and furnishings for when you move in. For that reason, work with the lender to see if there are any down payment assistance programs that can help you get the loan without stripping your savings, especially if you are a first-time home buyer. If you put down less than 20%, you’ll likely need to pay private mortgage insurance. Once you decide which offer is best for you, complete the application. As long as you have your paperwork in order and there aren’t any financial issues that arise before closing day, you’ve likely been through the toughest part of the mortgage process. You can look forward to signing your loan documents at closing and moving into your new home.