Choosing the Right Mortgage Lenders
One of the biggest questions that I have come across is “What is the difference between the mortgage lender and a mortgage broker?” Mortgage lenders provide money to the borrower at the closing table. Mortgage brokers do not lend money to anyone. A mortgage broker acts as a mediator between a lender and a borrower.
Choosing a mortgage lender is a very big step in buying or refinancing a home. Your initial thoughts in choosing a mortgage lender would be to find the lowest interest rates available. This is not always the best route to take as there has to be trust and you have to be able to work with the mortgage lender. You must take these into consideration just as much as rates afforded.
There are many different types of mortgage packages in the market today. A good mortgage lender’s responsibility is to make sure the mortgage product that you need is given to you.
Most mortgages do not differ in terms of loan rates (first time buyers sometimes get preferential rates). The only differences in the various types of mortgages are the loan structures; the term of the mortgage, the deposit, and the processing costs.
Nearly all mortgage companies offer terms from between 15 to 30 years, there are other payment options that are available but 15 to 30 years are the most common. Always keep in mind that the shorter you term the less interest you will have to pay but the more your monthly payments will be. Affordability is always the biggest factor to take into consideration, don't go beyond your means.
How to choose the best mortgage broker…
When choosing a mortgage broker, first place to start would be your local area. Look in your local newspaper for companies that offer the service that you are looking for. Word of mouth is probably the best option to take as they are first hand experiences, always easier to go with a mortgage broker that your best friend trusts and has had experience with them.
Among other things, don't be afraid to play the different mortgage broker up against each other (they want your business as much as you want a lender). This way you might be able to get preferential rates…
Always keep in mind your price range when looking for a new house (sometimes things can get away from you when you see a specific house that you just cannot afford), this is called prequalification.
By providing you financial status the mortgage broker will be able to supply you with the mortgage plans that suit your price range and goals.
The mortgage broker will guide you through the application form; rather ask too many questions than too little as you do not want any surprises whatsoever. Once the application is finished, he or she will submit it to the respective department. Once the loan has been accepted, the application/package will be forwarded to the relevant title company for closing. It will be the title companies responsibility to transfer the property into your name, as well as collect and disperse all the funds to the relevant parties.
You will be given a choice to “lock in” a rate during the application process. In so doing, you will be guaranteed a fixed interest rate during the term of your mortgage. Once your rate is “locked in” it is wise to request a written interest rate agreement from your mortgage broker rather than that of just a verbal agreement.
Choosing a broker that is well-informed and easy to get into contact with can make the mortgage application process a satisfying experience.
Things to remember:
You should not base your decision solely on the interest rates provided.
You should be comfortable and be able to trust your broker.
Always ask as many questions as possible, this avoids confusion.
This is one of the most important decisions you will ever have to make, so make sure your decision is the right one when it comes to choosing you mortgage broker.
A good lender can also assist you in making important decisions that will benefit you in the long run, so do not hesitate to ask questions about anything that needs clarification. As you can see, taking time to research the brokers may prove to be the most valuable investment you can make when applying for a home mortgage.