Finding the Best Mortgage Lender for You
You can secure a home mortgage loan from several institutions including banks, credit unions, mortgage bankers and mortgage brokers. Whether you're a first time home buyer or it's an upgrade home, understanding every option is important if you are to pick a loan you can pay off without any problems. Stories are rife about home buyers whose lack of knowledge and understanding was taken advantage of so that they were stuck with a home mortgage loan whose implications they did not really understand.
The real estate market can be likened to the stock market in terms of being fluid. Home mortgage loan rates change very often and they vary significantly between lenders. Keeping track can be confusing.
Less than honest
Another challenge with finding the best lender for your home mortgage loan is that some are often perceived to be less than honest. That disclosure laws governing the sector in order to protect consumers are not sufficiently enforced does not help.
An example is the Good Faith Estimate (known as the GFE) of Closing Costs a mortgage lender is required by law to give an applicant no more than three days after receiving an application. A lender may give one that indicates that one point or one percent of the loan amount will go towards the loan origination fee and another amount will go towards other fees like settlement fee, title insurance fees, County recording fees and other related costs.
What many home owners don’t know is that lenders are not bound by the estimates they give. Buyers have been surprised and disappointed when they are charged two points or percent when they go to purchase the house. However, lenders doing business the right way should never surprise you with fees or points and should follow best practices.
Do your homework
To avoid such scenarios, there are precautions that prospective home buyers should take when shopping around for a home mortgage loan. One is doing homework about the terms and processes of getting a home loan and understanding the financial implications of the different kinds of loans available.
The total cost of a mortgage is more than just the cost of the home. There are a number of related costs such as closing costs, insurance costs and several others. Ask and get a good understanding of every item you see listed on your Good Faith Estimate.
One would also do well to deal with a lender who has a reputation of being open and easy to deal with. Get referrals from family members, friends and colleagues who have taken a home mortgage loan. See if the lender offers reviews and testimonials from real clients.
Find out from them if the lender they dealt with gave them adequate explanations about the whole process, whether they locked the home mortgage loan at the rate they had put down on their estimate or undisclosed fees came up on the final documents.
Another party to ask for referrals to a lender is real estate agents. They have dealt with many lenders over the years and they can direct you to lenders who have been honest and professionals in their dealings. One still needs to do their own research on the lenders one is referred to though.
For instance, ask a lender if to share the HUD-1 closing statement of the last three loans they signed up. Ask also if they can give a Good Faith Estimate immediately as well as an estimate for the closing costs of the loan being applied for. A lender who is straight forward and has nothing to hide will be happy to answer every question and show supporting documents until a client is satisfied. One who is not forthright will feel queasy with all the questions and it will show.
Take your time
A home mortgage loan is a long-term and costly commitment. Take the time to thoroughly understand it before committing yourself.
You'll also want to make sure you do your research. Free guides are a good place to start. Download "The Only Mortgage Loan Options Guide You Need" at the button below. The free eBook covers your options for buying a home in today's housing market.
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