The home buying process can be confusing and complex—starting with finding the right mortgage lender. This is one of the most important decisions you will make in the entire process. The right lender can make the experience smooth and seamless while the wrong one can turn it into a roller coaster ride.
Finding a lender before starting the search will make the home buying process easier. A mortgage lender can help you determine a price range that you can comfortably afford, help you review your credit, and help you choose a program with the terms you want. All of this will lay the groundwork for a smooth closing when you find the home for you.
Below are suggested steps to find the best mortgage lender for your needs
1. Gather a list of potential mortgage lenders. Get recommendations from your friends, family, neighbors, attorney or a realtor. Look for companies with good reputations and positive online reviews from borrowers. Does the company stand behind its decisions? Has it been in business a long time? Are the loan officers experienced?
2. “Interview” potential loan officers. In today’s competitive marketplace, after all rates and fees are considered, the gaps between lenders will be very small. Can loan officers explain their different loan programs clearly? Are they focused on your needs, or more on their loan products? Are they friendly and prompt at returning calls and answering questions? Are they knowledgeable?
3. Ask specific questions about the mortgage company.
- Does the company have a pre-approval process? Some mortgage companies only have a pre-qualification process where they do not receive your documented financial information or pull your credit. They only ask limited questions and extend a pre-qualification letter. This can lead to disappointment if an offer is later made and rejected. Lenders that pull credit and discuss it with you can help avoid unpleasant surprises. Those lenders that go one step further and have an underwriter look at the preliminary information can issue a pre-approval letter. This gives even more assurance that there will not be delays once an offer to purchase has been made.
- What is the mortgage company’s commitment to close on time? The real estate purchase process is very date-driven. Specific things must occur before closing on a loan. Finding a company that has a team dedicated to real estate purchases will ensure a smoother process to get your loan closed quickly and when you need it to close. Dedicated purchase lenders are keenly aware of the timetables and benchmarks that must be met in order to close a loan on time.
- Additional important considerations: Does the mortgage company have full transparency? Are fees discussed upfront? Are mortgage lenders paid differently based on the programs they recommend? Is there an online feature that allows you to upload documents, track the loan and determine if any documents are missing?
4. Consider the recommendations of each loan officer. Which loan program does he or she suggest? Does it match the needs you expressed? It is essential to select the right loan program and compare not only rates but also the annual percentage rate (APR) that encompass certain fees into the rate calculator, since the wrong program can limit your future options and cost more money.
5. If you are turned down by a lender, do not just quit or shop around randomly. Find out the reasons for your denial, work on those issues and then look for a lender best positioned to address your specific situation.
So again, before you start your home search in earnest, you should select your lender. Then, you should complete a few loan related items. Apply for a pre-approval from your lender and verify you have no issues on your credit report that might cause issues. Get a solid understanding of the documentation required to complete the underwriting process.
Once you have completed these steps, you will be ready to start the search for your perfect house! Completing this process before house hunting will give you the confidence to make an offer on a home. It can also give you an edge in a competitive-offer situation, leading to a smooth and timely closing.