According to Statista, homeownership rates in the United States increased to 65.6% by the end of 2021, and first-time home buyers contributed 34% of all home buyers. You might wonder how so many people were able to afford a house. Follow our tips on choosing a mortgage lender, and you will be buying a home for yourself soon.
Six Tips on Choosing a Mortgage Lender
There are some things you must know when choosing a mortgage lender to get the best deal for you. Follow our tips on choosing a mortgage lender, so you know what to look for.
1. Know Where to Get a Mortgage
One of the first questions you might ask yourself is, where do you get a mortgage? Well, there are many different organizations you could go to for a loan.
Conventional Banks
Banks are one of the common go-to for a mortgage loan. You can apply for a mortgage loan from a bank online or in person, and they will assign a loan officer to you.
Credit Unions
Over half of the mortgage loan issues in a year are loaned from credit unions, ranging from small lenders to multi-state organizations.
However, you need to be a member to get a mortgage loan from the credit union, meaning you will need to have a common bond with other members. Credit unions are mostly preferred due to their members-only deals and personal services.
Non-Bank Mortgage Lenders
Non-bank mortgage lenders specialize in loans, primarily mortgage loans, and are an excellent choice for quick loans.
2. Learn About the Kind of Mortgage You Can Get
There are different kinds of home loans that you can get, each with its criteria and requirements. Some of the most common types of loans include:
- Conventional Mortgages: A loan not backed by the federal government and a down payment as low as 3%.
- Conforming Mortgages: A loan that is bound to a maximum loan limit that the federal government sets. The loan limit depends on the location; for example, the Federal Housing Finance Agency sets a higher loan limit in New York City because the homes are more expensive.
- Non-Conforming Mortgages: Loans such as Jumbo loans because the loan amount can exceed the loan limits of conforming mortgages. However, they require a more significant down payment (around 20%) and a strong credit score.
- FHA Loans: Government-insured Federal Housing Administration (FHA) Loans require a downpayment of 3.5% or more and are more relaxed regarding credit scores.
- VA Loans: Government-insured Veteran Affairs (VA) loans offer mortgage loans to military service members and veterans. It does not require a down payment and has a lesser closing cost and better interest rate.
3. Get a Mortgage Broker
Mortgage brokers can help you look for mortgage lenders and compile a list of the best options for you. Mortgage brokers take the complicated work off your hands, such as researching and reviewing mortgage lenders, gathering required documents, negotiating with the lender, and more.
You can hire a broker and Robert DeFalco Realty to make your life easier and take burdensome work off your hands.
4. Prepare Before You Apply
Once you have chosen the type of mortgage loan you want and the organization from where to get t, you must prepare to meet the requirements. You can find the requirements for your desired loans from your broker or the organization itself.
The first thing you need to do is improve your credit score. You should check your credit score a few months before you apply for your mortgage to see if you meet the minimum credit score requirement. Then, it would be best if you improve your credit score since the better your score is, the better your loan will be.
You will also need to save money for a down payment. At the most, you should save enough for a 20% down payment, even though you might have to pay as little as 3%. It’s better to be on the safe side of these things.
Finally, you must ensure that you have a stable income. Mortgage lenders prefer or require that you have enough secured monthly income to cover the monthly payments on your mortgage.
5. Ask Questions
When applying for a mortgage loan, you must be as informed as possible. If you are talking to a mortgage lender, here are some questions you should ask:
- How long will the process take?
- Which forms do I need to fill out?
- What documents do I need?
- Is there a process I must go through online, or will everything happen in person?
- How long is the interest rate lock period?
- Who will be the main person of contact, and how will we communicate?
- What are the interest rates?
In case you are talking to a mortgage broker at Robert DeFalco Realty, here are some questions you can ask us:
- How many mortgage lenders did you review?
- Which type of mortgage is best for me?
- How long will it take to get the loan processed?
- How long will the pre-approval take?
- How much loan should I expect?
6. Compare Deals
If you are working with a mortgage broker, then they will take care of comparing different deals. However, one of the biggest tips on choosing a mortgage lender is to know what to compare.
You do not go with the first offer you see. Compare the loan estimate, interest rate, closing cost, monthly payment, standard mortgage fees (appraisal, processing, underwriting, and more), and return period.
At a minimum, you should compare three to four deals before choosing the one that suits you the most.
Get in Touch With Robert DeFalco Realty
Robert DeFalco Realty has over thirty years of experience in real estate. Our professional agents are trained to provide you with any help and work as brokers to help you find the right mortgage. Following our tips on choosing a mortgage lender can get you halfway towards your mortgage loan, and Robert DeFalco Realty can take you the rest of the way. You can contact us today at 718-987-7900 or visit us at any one of our offices. Alternatively, you can fill out our form, and we will get back to you regarding your worries.
