Buying a home means finding a mortgage. It can be difficult to choose the best in home mortgage lenders. There are many options to choose from including banks, direct lenders, mortgage brokers, and private financing. The best choice will be the one with the most favorable financial deal on interest rate, closing costs, and a mortgage professional that can provide outstanding customer service.
These are the traditional banks, credit unions, direct retail lenders, etc. You can search for them on your own and won’t need anyone to act as an intermediary. As you start this research, it may be advisable to start a spreadsheet. These type of direct lenders can vary quite a bit between interest rates and terms.
If you don’t have the time or inclination to do the detail comparison of direct lenders, hire a mortgage broker such as Dave Kevelighan. For a Lender Paid fee that compensates the broker through the wholesale lender’s interest rate, the mortgage broker will do all the research and give you a summary of the best deals in the market. As previously explained, the mortgage broker is a NMLS licensed loan originator that matches borrowers with the best wholesale lenders. They are independent of any bank or financial group. They are not the lender, so they don’t underwrite the files for the final loan approval, but they have options to shop the best interest rates and programs in the market.
These are lenders that have warehouse lines of credit, and fund transactions. They are decision makers, and set their own interest rates and terms. The catch is that they do not administer the loan to its conclusion, instead they sell the funded mortgage to a loan servicer. If you are basing your decision on the cooperation and customer service of the correspondent lender, this may not be a good idea. You have no control over who they will sell your servicing to, or how friendly or supportive the new mortgage servicer will be in the end.
These are the more common lenders but there are others like wholesale lenders and portfolio lenders and private investors.
The best way is to shop around. Taking good notes is imperative so that you don’t get confused in the process. Start with your laundry list of questions including interest rates, down payment requirements, closing costs, and any other costs associated with closing the transaction.
You will be asked about your credit score or credit rating. The three main reporting bureaus are Experian, Equifax and TransUnion. The credit bureaus will show not only the FICO score, but late payments, delinquencies, and high credit limits. Having a solid credit rating makes you a more eligible borrower for your mortgage, and can increase the chances of a lower interest rate. Check these reports annually for errors, and be sure the corrections or updates are made when needed. Pay down or pay off any credit cards that can help improve your credit scores.
While you are searching out all of the lending options, learn the lingo. Be sure you understand the words and phrases that are tossed around. That way you won’t be blindsided when it comes to signing on the dotted line.