If you plan on buying a house and getting a mortgage, one of the first things to do is find a lender. Mortgage lenders are the institutions that provide you with the funds to purchase a home. They might be banks that offer other services, they might be banks that focus on mortgages, or they might be non-bank lenders. As the Consumer Financial Protection Bureau points out, lenders aren’t the same as mortgage servicers, who handle the day to day functions of your loan. They also aren’t the same as mortgage brokers, who work as a middleman, connecting you to the lender that best meets your needs. When looking for a mortgage, it’s up to you to shop around and find a lender who offers you the best deal and a mortgage you can afford.
Look at Rates
Interest rates on home loans are still near record lows. But, not all lenders are offering the same rates, even to the same type of borrower. When looking for a lender, it pays to look at the range of interest rates it is offering, too. As the Federal Reserve Board notes, it’s your responsibility to find a mortgage you can afford, not the lenders. Look up the average mortgage interest rates online, then call up or visit the websites of several lenders to see what range they are offering. Also, ask about different rate and term options. For example, if you get a 30 year, fixed rate loan, you might pay more in interest than if you got a 15 year, fixed rate loan.
Look at Fees and Options
The cost of a mortgage doesn’t end with the interest rate. Some lenders charge higher fees than others, such as loan origination fees or closing costs. Some lenders offer a no closing cost loan option. That means that instead of paying fees up front when you close, you pay a slightly higher interest rate. Whether paying upfront or paying a higher rate over the life of the loan makes sense for you depends on your current financial situation and how long you plan on living in the home.
Do Some Research
Once you’ve gotten an idea of the rates and fees lenders charge, it’s a good idea to meet face to face with a few and get the full story on them. Ask the lenders about their experience, whether they are licensed in Georgia or another state, and ask them to explain the details of a mortgage to you, in plain language. A lender should be able to help you clearly understand the costs of the loan and why those fees and rates exist. It’s also a good idea to ask potential lenders for references or referrals so that you can verify their experience.
If you’re ready to take the next step towards owning a home, speak with a mortgage specialist today to learn more about the lending process.
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