Choosing the right mortgage lender is an important step of homebuying process. The growth in the industry has ensured the availability of a wide variety of loan originators, from large corporate banks to small local financial institution. You may want to consider all options before choosing the lender that you can work with.
- Check Online Loan Originators: Internet-savvy borrowers may find it easy to search the World Wide Web for a list of potential lenders. The advantage with this approach is that you will quickly get to see the available loan products and current mortgage rates, which can enable you to compare the varying offers. Lenders with online presence only may be able to offer attractive discounts as they don’t have to spend too much on maintaining brick-and-mortar offices.
- Contact your Banks and Financial Institutions: You might be having checking or savings accounts with one or more banks and financial institutions. It is a good idea to begin mortgage hunt from there. The bank knows you and you know the bank. A kind of mutual trust is already in existence. Your bank is likely to consider if you have less than perfect or no credit history. Moreover, you can also expect discounts in fees and rates from your existing banks or credit unions.
- Seek Referrals from your friends and family: More often than not, an idea from someone you know can do the trick, saving you several dollars of professional advice. If you know a person among your family, friends and co-workers who have gone through the mortgage process recently, you must approach him or her for the invaluable advice on choosing a lender, and possibly a few referrals.
- Ask your Real Estate Agent: It is often a good idea, and sometimes a need as well, to hire a real estate agent. Ask your agent for a list of good lenders and you won’t be disappointed. An agent will be more than happy to suggest you the best-in-line lenders as their primary motive is to close as soon as possible and get their commission.
- Work with a Mortgage Broker: You may want to work directly with a mortgage broker. The benefit is obvious. You will get quick access to several lenders, which allow you to compare easily and choose the best among them. However, you may need to pay a fee upfront. Sometimes, the fee is paid at closing or rolled in the mortgage loan. Ask a broker how he or she should be paid before seeking his or her services.
- Find a List of Local Lenders from the HUD Website: The U.S. Department of Housing and Urban Development (HUD) maintains a list of qualified FHA lenders on its website. If you think you can qualify for an FHA-insured loan program, you may want to check this list and find a lender serving your area.
You can obtain, sort and scrutinize lists of lenders from various sources to shortlist a few lenders that you may want to work with. Visit each of them and ask questions on mortgage rates, points, turnaround time, rate locks and so on. Based on your interactions with these lenders, you will able to pick the best lender to apply and complete the mortgage process.