How to Compare The Best Mortgage Lenders

Home ownership has always been a lengthy and complicated process and the recent tax overhaul in the US hasn’t made things any easier. It is estimated that house prices will drop by about 4% by summer 2019 – and this is good news to buyers, obviously – but unfortunately most of the current homeowner-friendly tax deductions will be revoked. This is why it’s so important to find the best mortgage rate in the market today. This article will show you how to apply for a mortgage and how to find a good lender.

How to find the best mortgage rates

There are a lot of factors that determine your ability to get a good mortgage rate: things like mortgage type, credit score, and how much you’re willing to spend on the down payment. If you choose to hire a real estate agent, you’re likely to be directed to a handful of lenders (the agent may have a vested interest in directing you there) and the rates are not likely to be the most competitive. If however, you have the time to compare mortgage lenders and learn more about how to pick the right lender,  use this guide to get started.

Mortgage rate comparison

Lenders are mandated by law to provide what’s known as a Good Faith Estimate
(GFE), which is basically a document that briefly outlines the terms and conditions for your potential loan. This document is issued within three days of your loan application and its one of the ways you’re going to compare your options.

Polish up on your credit score

A high credit score tells lenders that you’re a low-risk investment and they’re more likely to expedite your loan application as a result. It takes time to build a credit score but the benefits are worth it. If for instance you take out a $350,000 home loan, you could pay as much as $100,000 in interest during the life of the loan if you have a low credit score.

But with a credit score higher than 760, your interest rate can be as low as 3%; though these figures are only meant to give you an idea of why its so important to have a good credit score.
Save up for the down-payment you can manage a 20% down-payment then you’re likely to get a low-interest loan and save a ton of money down the road. And of course, if your down payment is high enough, you won’t have to spend money on mortgage insurance.

How long do you plan to live in your new house?

You can find a number of adjustable-rate mortgages (ARM) that are perfect if you don’t plan to settle in your new home. There are additional risks with ARMs and you’re likely to pay more over the life of the loan; so if they seem like too much of a risk, then consider taking a shorter-term fixed rate mortgage instead.

How to find the best mortgage lender

You need to find the best home loan rates and a lender with good customer support. Here’s how to pick a mortgage lender:

1. Talk to your friends and family

Local lenders don’t always have a strong web presence so it might help to ask friends and family about their experiences. Do a quick survey of trusted friends and family members and focus on people who’ve recently purchased a house or refinanced their home, and go through the lending process to see if they go a fair, courteous, and responsive service.

2. Do some research

You can read the comments sections on the top home lenders in the country (though the comments are sometimes biased) and check with recognized authorities like USAA, Capital One, U.S. Bank, and BB&T.

3. Visit the lender

Take note of how they treat their customers and try to get a feel of the place. If they don’t make any effort to help with any of your questions or to they seem dicey if you call for information, then that should be a red flag. It would be a nightmare to get stuck with a lender who’s not pleasant to deal with.

Remember, there are different type of home loans and your preferred lender will guide you through your options to help you find a loan package that works for you. To get a decent home loan you need a good credit score and show some consistency in your savings history, employment history, and have a good history of debt clearing.