Finding the Right LenderPosted on Jul 30, 2020
When shopping for a mortgage, you’ll want someone who can offer you the best deal and fantastic customer service, so how do you go about finding that perfect lender?
Shop around. Compare different lender options, like your bank, local credit unions, or online lenders. Before you sign on the dotted line with anyone, there are a few things you can do to secure the best rate.
Improve your credit
Before you start applying for mortgages, give your finances a once-over. This means pulling your credit score and report.
The good news: Once every 12 months, you’re entitled to a free credit report from each of the three main reporting bureaus – Experian, Equifax, and TransUnion. Visit AnnualCreditReport.com to get yours. If your score comes back lower than expected, check your reports for errors, late payments, delinquent accounts and high balances.
Lenders also want to see that you can handle your existing debt along with a new mortgage payment, so they’ll review your debt-to-income ratio. This formula adds all your monthly debts and divides it by your gross monthly income to get a percentage. In order to keep your DTI ratio favorable, avoid taking on new loans or making large purchases on credit cards for at least three months (or more) before applying for a mortgage. Keep doing this until your loan is closed, as lenders can pull your credit report at any time throughout the application process.
Questions about how to improve your score? Our Team Lassen lending team would be happy to go over some pointers.
Determine your budget
Even if you qualify for a specific loan amount, it’s smarter to hone in on a monthly payment you can comfortably afford.
To get a better idea of what you can afford, include monthly bills like utilities, childcare, and phone service, as well as other financial goals, like saving for emergencies, retirement, and college. Look at your monthly net income (after bills and living expenses are met) to calculate how much you should spend on a mortgage payment.
Know your options
Familiarize yourself with different types of mortgages. Some upfront research also helps you separate mortgage facts from fiction.
While many people think they’ll need to put down 20% on a home, the truth is that many lenders offer loan options with as little as 3% down. Some government-insured loans even come with a ZERO down payment!
Talk to several lenders
You want to rate-shop with different kinds of lenders – banks, credit unions, online lenders, and local independents – to ensure you’re getting the best deal. At Team Lassen, we’re proud to offer competitive products, rates, terms, and fee structure, so make sure we’re one of your calls!
Why shop around? If you don’t, you’re probably leaving money on the table. According to Freddie Mac, borrowers could save an average of $1,500 over the life of their loan by getting at least one additional rate quote, and an average of $3,000 by getting five quotes.
Applying for a mortgage pre-approval with several different lenders gives you an accurate comparison and pricing for your loan.
Remember: Lenders can re-check your credit, employment, income histories and assets at any time during the process. Avoid taking out new credit, moving money in your bank accounts or changing jobs before – and during – the buying process.
Step 6. Read the fine print
Review your mortgage docs closely. Pay close attention to your interest rate, monthly payments, lender and loan processing fees, closing costs, and down payment amount.
Ask questions if you don’t understand certain fees or spot errors in the paperwork.
Mortgages are not one-size-fits-all products, so you’re better off knowing how they work and how they differ from one another.
Curious what the difference is between us and the banks? Team Lassen only takes weeks while banks take months. Time is money and of course, you want to move into your new home as quickly as possible! At Team Lassen, we’re happy to help you weigh your mortgage options and find the loan that‘s best for your situation!