If you’re looking to buy a new house, you will need to do some research into your mortgage lender to make sure that they are right for you.
It is especially important that you do this because every mortgage provider is different.
There will be a vast difference between the financial products on offer, the interest rates, and the customer service that you will receive depending on the mortgage lender that you chose.
So, how do you pick the right lender for you?
Here are seven essential questions that you should ask before choosing a mortgage lender.
When buying a home, you will have an idea of when you would like to move by. Understanding the way that the length of the approval process is essential as it may be a factor that influences your decision over which lender to choose.
Finding out how the approval process works, is essential too. You will need to know when a mortgage lender is going to pull up your credit score. Understanding the approval process will allow you to plan any significant purchases or financial changes that may affect your credit rating.
Before you apply for your mortgage, you should ideally run a credit score check on yourself. However, consumer reports platforms are different from those used by lenders. After all, the lender must use different metrics to measure your affordability but his will help you identify any areas of concern so that you can address them. This will ensure you’re able to borrow the maximum amount possible.
Find out what type of information the lender will need from you to pre-approve your loan. In addition to this, you should find out how long your pre-approval will be valid.
As a borrower, you will want to know what is going on with your home loan. Find out how the lender proposes communicating with you. Will they phone you? Many customers prefer direct contact.
If your circumstances make it difficult for your lender to get in touch with you, will they use another method such as email, SMS, or do they have their own online system?
Knowing how your lender will get in touch with you will mean that you can keep an eye out for communications.
The type of mortgage that your lender recommends will dictate the amount that you’ll need to put down as a deposit.
You may have a specific amount saved that you could use, and it will be crucial that your down payment matches what you can afford.
You should also find out from the lender whether you will be eligible for any form of down payment assistance. One such example of assistance might be if you are a veteran.
Mortgage lenders will use a lot of factors to determine how much you can borrow. These will include your earnings, the amount of debt that you currently have, and your credit score. It may be possible that you can get pre-qualified for your loan but that just means the loan officer is making an assessment based on your word and not the actual steps needed to get pre-approved.
Pre-approved is a process where the lender has verified all your information to be 100% certain your loan is approved. Pre-qualification is just an assessment.
Find out how much you will be able to borrow. Once you know how much you can borrow, you will be able to start looking for a new home to buy.
If you have been pre-approved for a loan, then you should find out how long this is valid. This will give you a timeframe to work towards when looking for a house to buy.
The interest rate for homes will vary depending on the mortgage that you take out. No interest rate is the same for everyone, there are many factors that dictate the interest rate. Usually the three C’s of underwriting being a major factor, Credit Score – credit history, Capacity – debt to income ratios, and Collateral – how much you are borrowing vs the value of the subject property.
Find out what the interest rate is on the mortgage that you are considering taking out. There are typically two different types of mortgage interest, fixed rate, and variable rate.
Fixed-rate loans will have the same annual percentage rate (APR) throughout the duration of the loan. Whereas, with an adjustable-rate mortgage (ARM), the interest rate will change in line with the market and the economy.
If the interest rate is adjustable, find out if there is a fixed term at the start of the loan. These adjustable rates are only used for certain situations where the borrower fully understands the loan program and has been educated on why the loan is the best fit for them.
When buying a home, your down payment is not the only thing that you will need to pay. There may be several other fees associated with the loan and the purchase of the home.
To understand the fees that you may need to pay, ask your lender to provide you with a Closing Disclosure. A closing disclosure is a five-page document that will explain all of the details of the costs associated with your mortgage in addition to the full terms of the loan.
The additional costs that you will need to think of may include lenders’ fees, as well as third-party fees for things such as insurance, survey costs, and appraisals.
You should compare the closing disclosure against the initial loan estimate provided to you.
The length of time it will take to close will vary. Your mortgage provider will be able to give you a clearer picture of how long this is likely to take.
If you are buying a home, there may be timeframes that you need to work to. You’ll want to know that you are going to be able to move into the house by the planned date. If you know what to expect when it comes to your closing date, you’ll be able to better plan your move.
It’s essential that you ask plenty of questions when deciding on your mortgage lender. Make sure that your lender’s time frames, and financial products, meet your needs and expectations.
Marketplace Mortgage looks to make lending money for your home simple.
To find out how Marketplace Mortgage can help you find the right mortgage for you, get in touch today.