Don’t Get Stuck With A Bad Loan! How To Find A Mortgage Lender That Works For You

Finding a mortgage lender is a critical step in the home-buying process for most buyers. Loans provide the additional capital you need to get the house you want.

Unfortunately, selecting the right financial institution isn’t always straightforward. You can’t always tell which offers the best option.

The trick is to educate yourself. Once you understand how to sift through mortgage lenders and find the best, you will likely get a deal that benefits you.

Educate Yourself

Before you look for mortgage lenders, educate yourself. Learn as much as possible about various loan options and which might be best for you.

Most borrowers opt for fixed-rate mortgages, which keep the interest rate constant throughout the initial agreement. After that, lenders adjust them in line with the base rate and set them at a new level for an agreed-upon period. Adjustable-rate mortgages vary with the central bank’s base rate regularly.

Shop Around

The next step is to shop around. You want to find a mortgage lender offering the lowest overall price for the initial term.

Don’t just look at banks or credit unions. Instead, explore other options, including cooperatives and online lenders.

Poring over these choices yourself is time-consuming. Therefore, use services like Money Expert to compare all the eligible mortgage lenders for your home purchase. Don’t limit yourself to just one or two options.

Use Mortgage Brokers

You can also use mortgage brokers. These work with multiple lenders to secure superior deals.

Some brokers have direct deals that aren’t available online. However, they receive a commission from the lender on sales.

Don’t Just Look At The Interest Rate

When exploring mortgage options, don’t just focus on the interest rate. Instead, look at the other factors contributing to the price of the loan. Low-interest lenders often make up the difference elsewhere.

Additional mortgage costs include fees charged by the lender to process your application, appraisal fees to calculate the value of the property, title search expenses to ensure there are no issues with the property titles, credit search report costs to determine your creditworthiness, escrow fees for holding property taxes and insurance costs if your down payment is small.

You can use this information to calculate the implied interest rate – the rate that would apply to a loan if the lender bundled all their costs into it. This metric will give you a number you can use to compare mortgage offers directly.

You could also calculate the total cost of the mortgage over the relevant period (i.e., the first two years). Again, this figure will allow you to compare mortgage costs, irrespective of interest rate charges.

Making Your Choice

The final step is to make your choice. During this process, you’ll want to consider factors other than cost, including the lender’s customer service.