The most significant purchase people make in their lives is the purchase of their home. Whether the house is a modest cottage or a large multi-generational residence, finding the right mortgage with the right rates is vital. However, how do you know if you’re getting the best rates? Moreover, how do you know if you’re exploring all your options so you can make a well-educated decision? In our latest blog, we’re going to go over the best way to find a mortgage lender and why shopping around matters.
Why Consumer Shopping for a Home Mortgage Matters
Many consumers either have a mortgage lender they’ve used in the past, or they will find one by asking friends or family. And rarely, unfortunately, do these consumers shop around and compare rates among lenders. So, why is shopping for a home mortgage important?
Mortgage Interest Rates Can Vary Considerably
The biggest reason to shop around for mortgage lenders is that interest rates will, and do, vary greatly depending on the lender you choose.
In a 2018 study, the Consumer Financial Protection Bureau noted that consumers who shopped around had reduced interest rates. Further, the study found that failing to shop around can cost the average American $300 a year and thousands of dollars over the course of the loan.
Spending that kind of money when it’s not needed is crazy! This is precisely why we encourage our clients to shop around. When we are beating the reported national average mortgage rates by 0.25% or more in the months of April and May comparatively, we’re confident in our services and want our clients confident too.
Many Lenders Don’t Offer All Loan Options
Did you know that we’re one of the few lenders in the nation to offer VA construction loans? As independent mortgage brokers, we help our clients by shopping different wholesale lending channels to come up with some of the most attractive lending opportunities available in today’s mortgage markets. And to be fair, there are a lot of other lending options out there that many banks don’t offer.
So, get out there and look for a loan option that works for you and your unique situation.
The Best Way to Find a Mortgage Lender
Now that you know why it’s essential to shop around, here’s the best way to find a mortgage lender who will have the options and rates you need.
1. Get Your Credit Score in Tip-Top Shape
While there are loan options for lower credit scores, the higher your score, the more bargaining power and options you have. Check out this blog on ways to improve your credit.
2. Understand the Major Players in the Lending Industry
There are many mortgage lender options out there, and it’s essential to know who is who.
Credit Unions
These are member-owned financial institutions that offer member-only rates and perks. In the past few years, they have eased requirements so you’ll be hard-pressed not to find one you can join. Keep in mind, however, that just because it’s a credit union doesn’t mean you’re getting the lowest rate possible.
Mutual Savings Banks
These institutions are usually local, community-focused, and extremely competitive.
Mortgage Bankers
These lenders work for a particular banking institution, which means underwriting is done in-house and by that bank.
Independent Mortgage Brokers
Our favorite type of lenders; these lenders have private mortgage companies that have access to the resources needed to fund your home loan. Because private lenders don’t have to follow one bank’s specific type of underwriting, they can provide more options and often lower rates. Plus, they do the shopping for you, which saves you time and money.
Savings and Loans
Once the most common lending option out there, S&Ls are a bit harder to find since the great recession. These companies are community-oriented and typically small in size.
3. Get Preapproval from More Than One Lender
Once you’re ready to apply, it’s important to go through a pre-approval process so you know what kind of budget you’re looking at. The approval process can be different depending on which type of loan you’re applying for. For example, for the VA loan, you will need particular military discharge forms, whereas for the portfolio loan, you’ll need a good amount of assets.
Of course, get pre-approval from more than one lender so you can compare interest rates. Having more than one pre-approval is how you will be able to make the best choice possible. If you’re not sure which loan is right for you, don’t hesitate to reach out to us. We’re happy to help guide you in the right direction.
4. Choose Your Lender
Once you have the rates and loan options in hand after the pre-approval process, it’s time to choose a lender. While interest rates are significant, it’s also important that you trust and even like your lender. Here are a few things to consider when picking your lender:
- How do they prefer to communicate? Text, email, or phone? If they prefer to call you, and you prefer texting, this might make the loan process a challenge.
- Ask about turnaround time. In today’s world, lending shouldn’t take as long as it used to.
- Make sure to ask about lending fees that you will be responsible for during closing, so they don’t come as a surprise.
- Always check their reviews online. Most lenders will have a Zillow account, or the like, where you can read reviews of past clients.
Apply with Strategic Mortgage Solutions Today
Whether buying a home, refinancing to get a better rate, or getting a cashout, shopping for a mortgage is important. We love saving our clients time and money by shopping for you. Contact us today.
