Homeownership has long been considered the cornerstone of the American Dream.
Owning your first property is a major milestone in most people’s lives, however, today it’s harder than ever for young people to reach this goal. These days, financial hardship and high prices mean your first home purchase might look a little different than the purchases of yesteryear.
If you’re looking to purchase a home, you’ll need to get familiar with how best to select a mortgage lender. There’s little chance you’ll be able to afford a home without a mortgage, and this means you’ll need to get familiar with what makes a good lender and a bad one.
What are the mortgage lender options out there and which ones might be right for you? Read on and we’ll walk you through what you need to know.
Understand Mortgage Types
First thing first: before you take the time to pick out a mortgage lender, you’ll need to understand the mortgage types that will be available to you. There are several different types of mortgages, and depending on which you’ll want, you might end up with a different lender as your partner.
Fixed-rate mortgages are among the most common type of mortgage you might come across when you look into purchasing a home. This is a mortgage where the interest rate associated is decided upon and locked in for the entire life of the loan.
As you can imagine, this is a preferred type of mortgage as it allows payments to remain the same. Predictable and steady payments will be needed and there should be no surprise as you work towards an overall goal.
Adjustable-rate mortgages, on the other hand, are a little less predictable. Depending on the movement of the overall market, the interest that will need to be paid on these loans month-to-month may change. Typically, the interest rate stays consistent for some number of years before changes can be made.
If you’re thinking that you may sell your home before your mortgage is fully through, this kind of loan might get you a better deal.
There are also government-backed loans: FHA, VA, and USDA loans. Government loans tend to be fixed-rate, while also offering lower overall rates and requiring lower credit scores. That being said, these government loans also tend to require lengthy applications and require certain qualifiers.
For example, where you’re purchasing a home, your veteran status, and your income all might contribute to your ability to get a government-backed loan.
Read Customers Reviews
The number one thing you’ll want to do when considering a certain mortgage lender is to read the feedback from borrowers that have come before you.
Logic should reason that if a great many people have had positive experiences with a lender before, then your own personal experience should really be no different.
Most mortgage lenders should be able to be researched online. You should be able to access a large number of reviews left by current and former clients. For example, if you research a company such as DVC financing, you will find that there are many happy former customers who have left feedback online.
If you are looking into a certain lender and see negative reviews, or see no reviews at all, it might be a reason to be concerned.
Relying on Friends & Family
Finding positive reviews from sources online may be one thing, but there really is no better source of positive feedback than a friend or family member already in your life.
It’s well worth asking around in your community to see what their experiences with their mortgage lender have been like. These stories will be more easily verified than those you find online, and likely will be more applicable to your immediate situation.
It’s easier to trust the word of people in your own life as compared to people online, as well-meaning as they may be.
Another advantage of talking to friends and family would be that if they do have a positive relationship with their lender, they might be able to refer you. This can help you obtain a great loan at a great price in an easier fashion.
Shopping Around
A big part of the mortgage lender selection process will be shopping around and getting quite from different lenders. Comparing mortgage prices is the only way to ensure you’re getting a solid deal with the lender that you do decide to go with.
Mortage shopping will give you a sense of what the overall market is like out there. If someone is far too high or far too low in their offer to you, you’ll only be able to tell by comparing it to other mortgage offers that come in.
It can be tempting to go with the first solid offer that comes through, however, doing so might be preventing you from getting a better loan.
Shopping around will also give you the opportunity to get a sense of what a mortgage lender’s customer service is like. You can feel out how communicative they are, how easy they are to work with, and how well they answer questions and take care of concerns you may have.
How to Select a Mortgage Lender
If you’re about to make a move on purchasing a new home, you’ll need to get familiar with how to select a mortgage lender. The above information can help you determine how best to pick out a lender and ensure you get a solid loan offer.
Need more home buying advice? Keep scrolling our blog for more.