If you are purchasing property one of the most important tasks you have is to find the best mortgage lender. This is particularly true if you are a first-time homebuyer who may not be aware of the various pitfalls you can face. Keep in mind that these pitfalls are not that the lender is doing anything illegal, but they may not have options that are as flexible as other lenders. Shopping around pays off. You have to do your homework and there is a little preparation on your end that must be done before you begin your comparison shopping trip.
Prepare Before You Get the Process Started
At the top of the list, you must get copies of your credit reports. You can get them for free once a year, by law. If you have recently been turned down for credit you can also get a free credit report. Once you receive the reports go over them carefully. Frequently you will find errors in your report. They may list addresses you never lived at or they may show credit cards that were paid off but don’t reflect that information. In short, if you find any errors at all dispute the error and get it corrected.
Another thing that lenders look at is your debt-to-income ratio. This number is how much you owe compared to how much you make. This number includes student loans, credit cards, car loans, lines of credit, and purchases such as furniture or computer equipment that you got through a deal at a department store. Pay off or pay down what you can before you start looking for a lender.
Types of Lenders
Once you have your finances in order you can begin looking for a lender. There are many types of lenders and all have their pros and cons. There are credit unions, mortgage bankers, local banks such as savings and loans and mutual savings banks, portfolio lenders, correspondent lenders, and wholesale lenders.
Mortgage brokers are affiliated with a number of financial institutions and they will take your housing requirements and your financial information and search the lenders they deal with to find you the best deal. If you are eligible for VA, FHA, or USDA loans they will find a lender that deals with those programs. Not all lenders do. A-Plus Mortgage Solutions is one well-rated broker if you are looking for a mortgage lender in Carlisle, PA.
Get a pre-approval letter from a mortgage lender. A mortgage broker can help you with this. This letter will help you when you start bidding. It basically says I’m likely to be approved and that will close the deal faster.
Get Rates from Multiple Lenders
Search online for various rates and choose the best ones for you. But don’t stop there. The rate may be good, but the closing costs are important.
The Fine Print
Buying a house is more than just the interest rates. Each lender has different closing costs and these can be almost as important as the mortgage itself. Find out exactly what it will cost you in fees, points, transaction fees, home inspections and what is paid by you. Those are the things that are unique to the lender. High fees should be a deal breaker.