How to choose the right mortgage lender
It is often said home is where the heart is, but it’s also where a lot of money goes. If you’re like many Americans, a home is the largest purchase you’ll ever make, so you’ll want to make sure it’s also the smartest. Getting the best mortgage for your family starts with choosing the right lender, and here’s how to do just that.
Understand the industry
If you’re purchasing a home for the first time – or the seventh – or refinancing a current mortgage, you’ll want a lender with your best interests in mind. Before you start shopping around, it’s important to know how the mortgage industry works, and be acquainted with its key players. While there are several professionals or entities that can help you secure a mortgage, you’ll want to choose what makes the most sense for you.
A mortgage broker can do a lot of the legwork for you when it comes to comparing lenders and loans. But keep in mind that “mortgage brokering is a business, and brokers charge a fee for their services,” according to Bankrate. Additionally, mortgage brokers may still be limited in the loans they offer you, as some lenders will only work directly with borrowers.
If you’re willing to perform the due diligence yourself, you’ll just need to decide what kind of lender you want. A large lender might give you a variety of mortgage options, but a smaller, local lender may offer you more convenient, personalized service.
”Research and ask lots of questions,” said Lisa Clore (NMLS#506221), senior vice president & director of mortgage lending for Community Bank (NMLS#478283), which has 24 branches across Pennsylvania, Ohio and West Virginia. “Be sure you talk to a local bank.”
Compare it all
That research is key to finding the right mortgage lender – and the right mortgage, according to Clore.
”Request cost sheets to do a comparison of fees and rates,” she advised. You might be surprised to find out, for instance, that you’re better off with a larger down payment and a smaller monthly payment. “Many buyers finance with the FHA program when they could possibly qualify for a conventional mortgage,” Clore said. While FHA buyers might benefit from lower down payments, they’ll likely pay more due to required mortgage insurance payments.
Know your servicer
In the banking industry, loyalty is a good thing. But keep in mind the bank you choose to originate your loan might not actually service your loan. That means the lender you work with during your preapproval and approval process will not be the entity to whom you make monthly payments or contact with questions. Before you commit to a bank for the friendly faces you see when you walk through the door, find out whether those friendly faces will actually be servicing your loan.
Make sure you’re seeing the big picture
Finding the perfect mortgage lender can take some effort. Once you’ve accomplished that, don’t handicap yourself by making some of the most common mistakes made by first-time homebuyers.
”A big mistake is when buyers acquire new debt before closing,” Clore said. This includes anything from a new car payment to a new credit card, both of which change your credit profile and, consequently, your mortgage approval status. Additionally, charging up your existing credit cards is a bad idea as well, according to Bankrate, as this will change your debt-to-income ratio. If you’re considering a career change, hold tight at your current job until your mortgage closes because your lender will require up-to-date pay stubs as well as a solid two-year income history.
If you’re looking to finance your American dream, trust your local experts. Community Bank can help you select and close the best mortgage for you and your family.
This article is sponsored by Community Bank, which is an Equal Housing Lender and a Member FDIC.
A journalism graduate from Brigham Young University, Kristen Price has experience writing in a variety of fields, including art and culture, health and fitness and financial and real estate services. Kristen has written for USA Today, SFGate and the Knot.