Five Tips for Finding the Best Mortgage Lenders
Buying a home and taking out a mortgage is a long term commitment that may last from 15 to 30 years. It is therefore recommended to take out a omortgage from the best mortgage lenders. Mortgages are normally handled by banks, non-banking financial institutions, and credit unions, etc. Listed below are 5 tips for finding the best mortgage lenders:
- 1. Know your budget
It is important to know what you can afford to pay as mortgage every month. You need to know your total earnings; your mandatory savings; your expenses, taxes, and other payments in order to find out the amount of money that you can put up as mortgage. Once you know your budget, you can contact mortgage lenders and check with them about varied mortgage loan options that fall within your budget. Some types of mortgages that are available include conventional mortgages, government backed/insured mortgages, and portfolio mortgages, etc. Most home buyers opt for conventional mortgages.
- 2. Research and compare the interest rates, etc.
There are many components that make up a mortgage loan, like interest, insurance, down payment, debt load, etc. You will need to compare the interest rates offered by different mortgage lenders. You also need to check the APRs or annual percentage rates. Additionally, verify and compare the charges, fees, and other costs that a lender may charge you as part of the application. Ensure that you are clear about all the associated numbers before taking a call.
- 3. Check with family and friends for suggestions
Call up your family, friends, or colleagues who have mortgages on their homes or have recently taken out a mortgage. Take all relevant details from them such as the contact information of the mortgage lender, the varied rates, etc. You may also contact a local real estate agent for additional information.
- 4. Ensure that you have a good credit history
Different aspects of a mortgage such as the total loan amount that may get approved, the different fees and charges, and the interest rates, etc. are dependent on a mortgage borrower's credit score. A good credit score will mean that you can avail of a larger mortgage with a better rate of interest. The mortgage lender may also waive off some fees and give different discounts and deals. In case your credit score is not that great, then you can look to improve it by paying off debts, etc. Even if you have a not-so-great credit report, you may still check all the options that are available. The interest rates and other aspects of your mortgage loan may change a few years down the line after your credit history improves.
- 5. Get preapproved before searching for homes
Get preapproval for a mortgage amount from a mortgage lender before you start search for houses. A preapproved loan means that the bank has done its due diligence and found you to be a worthy borrower. This will help enhance your ability to get a better deal when purchasing the house.