With so many mortgage companies to choose from, it may be difficult deciding which lender to use. Which factors do you use in evaluating a lender? How important are they on your list of must-dos? Below are four important factors to consider when selecting the right mortgage lender.
How much does it cost to borrow money from the lender? The lower your interest rate, the less you have to pay over the course of your mortgage. Do your research and compare rates with several lenders. Your lender may offer a rate they think is best for you, but it’s a good idea to see what others offer.
Is your interest rate fixed or adjustable? These are the two most common types of loan rates. What is your monthly principal and interest payment? Even with the same interest rate, monthly payments can vary significantly depending on the terms of your loan and annual escrow charges (this includes homeowners insurance and property taxes). Use an online calculator to run the numbers.
Closing costs and other fees
It can be tempting to simplify your loan shopping process by simply looking at the down payment and interest rate. However, closing costs and other fees can add to your overall mortgage costs, too.
Who are you doing business with?
There are a number of online mortgage sites as well as banks and credit unions with staff ready to help. But do you know the name behind the brand? Do you want to know? Decide up front if having an in-person relationship with your lender is important. If that’s the case, your bank or credit union may provide the best service with a rate that suits your budget. If a face-to-face relationship is not important to you, consider an alternate path. Don’t forget to ask friends and family for recommendations. And check out online reviews to see what others have said.
Transparency and overall customer service
Entering into a mortgage agreement is a long-term, significant financial decision. If this is your first home-buying experience, you are likely to have a lot of questions. You want your mortgage lender to be one that is available, willing and able to take the time to answer all your questions in a knowledgeable, up-front manner.
Buying a home is an important milestone for any family. So selecting the lender with the most favorable loan and terms is a crucial element of the home-buying process.
Article provided by Local Government Federal Credit Union.