4 Tips For Finding the Right Mortgage Lender

Gearing up to apply for a mortgage? Here’s how to find a lender who will guide you through the process successfully…

If you’re like most home buyers, you’ll need to obtain mortgage financing before you can purchase your dream property. There are a number of important decisions you’ll need to make, but one of the most critical is who you’re going to work with. The truth is, not all lenders operate in the same way—or provide the same benefits.

If you’re looking for a professional who can help you achieve your home-buying goals, it pays to weigh your options. Here are four simple tips for finding the lender that’s right for you…

1) Get your credit in order

No matter which lender you decide to work with, they’ll be in a better position to help you if your credit score shows that you’re a responsible borrower. Luckily, there are steps you can take to raise your score relatively quickly. Start by ordering a copy of your credit report to ensure that it’s accurate. Errors can damage your score, so if you find any, be sure to correct them right away.

If possible, you should also pay down the balance on your existing credit cards. Be aware that it’s not just the amount of debt that you have that matters—it’s also the amount of credit available to you in proportion to what you owe. By asking if you can up your limit (or getting a card from a new issuer), you may be able to increase your ratio of unused credit to the debt you have to pay off. This boost could potentially improve your score, which will allow you to put your best foot forward when you start looking for a lender.

2) Broker or bank: know the difference

There are a few different types of lenders you can go to for a mortgage. But for most borrowers, it comes down to two options: banks and brokers. There are benefits associated with both. When it comes to your bank, the preexisting relationship you have with them can make the process very convenient. They know you well, which means they’re well positioned to help you understand how different mortgage options would fit into your overall financial situation.

Though they’re used slightly less often, brokers are becoming increasingly popular with buyers. The biggest benefit of working with them is that they’ll comparison shop for you. Unlike banks, they have access to outside financial products and services—which means they can help you find the best rates and conditions available. Having said that, if you feel more comfortable working with your bank, you may be able negotiate with them.

3) Do some online research

Whether you decide to go the lender or broker route, it pays to do your homework. Begin with a bit of online sleuthing. It’s true that most consumers will google a service provider before working with them. But when it comes to something as important as a mortgage, a thorough assessment is crucial.

If you’re thinking of working with a particular professional or institution, dig into their website. How credible does it look? Is all of the information it contains straightforward and easy to understand? Big banks are pretty much guaranteed to have a professional online presence, so smaller lenders may require a bit more vetting. Remember that third-party reviews can also give you a good idea of what working with someone is really like.

4) Ask the right questions

During the home-buying process, there’s nothing worse than being blindsided by unexpected delays. Unfortunately, lenders are notorious for holding things up at closing with last-minute requests. That’s why it’s so important to ask about loan-processing times.

You’ll also want to know what to expect in terms of costs. Will you be charged if you want to lock in an interest rate? How much will your loan application and processing fees be? Looking ahead, will you be charged a prepayment penalty if you’re able to pay off your mortgage ahead of schedule?

Before you commit to working with a lender, you should know exactly what to expect. Consider making a list of questions before you go in to speak to someone—and ask your real estate agent if you need help understanding how obtaining your mortgage will fit into the home-buying process.

Have questions about applying a mortgage—Or the home-buying process? Get in touch. We’d be happy to answer any questions you might have about the selling process!