Whether you’re buying your first home or your forever home, choosing a mortgage lender can have a lasting impact — either good or bad. Finding the right mortgage lender can mean lower rates, reduced fees and better customer service. And, like every other big purchase you’ll make, a little bit of research goes a long way. Follow these tips to find the best mortgage lender for your new family home.
Determine What Matters to You
Your first step is to figure out how much home you can afford. Next, brush up on your mortgage basics. Ask yourself these questions:
- How much do I want to pay each month?
- How much money can I put down?
- Do I want a 10-, 15- or 30-year loan?
- What will cost me less over time?
- What’s my credit score and how will that affect my loan options?
- Do I qualify for a special type of loan (FHA, VA, etc.)?
Understand the Different Types of Mortgage Lenders
You have countless options when finding a mortgage lender. Let’s break down the most common options.
Banks: Some companies are direct lenders, meaning they work directly with consumers. These mortgages tend to offer competitive rates. Remember: Obtaining a mortgage means lots of paperwork. Going with your current bank may be more convenient — or not, if you’ve had less than stellar customer service in the past.
Credit unions: Mortgages at credit unions generally offer the same benefits as borrowing from a bank. If you have a positive existing relationship with your credit union, it’s worth asking for a mortgage quote to see how rates compare. Bonus: You’re supporting a local business.
Non-bank lenders: Going with a company that only sells loans has its benefits — after all, it’s the only thing they do! Many of the online-only options boast easy-to-use online tools that demystify the lending process. However, you may not get the same personalized experience as using a credit union or broker. These businesses will oftentimes sell your loan, which is a normal practice.
Mortgage brokers: If the thought of shopping for a mortgage sounds daunting, turn to a mortgage broker. Brokers have established relationships with different lenders, and can consequently help you secure the best option — usually for a fee.
Ask for Recommendations and Shop Around
Before you start your housing search, start talking to lenders and gather the paperwork you need to get preapproved for a loan. It’s likely your friends and family have companies or loan officers they’ve worked with and liked; start there. Then, talk to your bank and/or credit union and any online lending companies with attractive rates.
It’s a good practice to obtain at least three quotes to see how companies’ terms and rates compare — shopping around could save you thousands of dollars, according to the Federal Trade Commission. Remember: Obtaining quotes does not tie you to a specific lender, but instead helps you make a more informed choice.
Don’t Be Afraid to Negotiate
Think back to the last time you purchased a vehicle: Did you automatically take the sticker price without any negotiation? Probably not. Part of being an educated buyer means knowing the “going rate” for mortgages.
Since you’ve shopped around, use those terms and conditions against other lenders to come out on top. Consider asking a lender to match another’s rate or reduced fees. A little haggling discomfort now means big cost savings in the long run.
Are You Ready to Buy a Home?
Buying a home is a long process that requires a lot of preparation. If you’re starting the process of buying a home, we can help. Connect with a Farm Bureau agent or advisor find out how you can prepare to buy a home.