An important step during the home-buying process is to pick the right mortgage lender. Not all lenders are created equal. For the most part, lenders are looking to make extra profit besides the interest rates. It is why you have to look thoroughly at your home estimate cost sheet to determine the differences among lenders. Once you know your credit history, down payment amount, and the type of mortgage loan, it is time to pick the lender with the best deal.
SHOP AROUND..
You have to shop around to find the best mortgage lender since choosing a mortgage is a long term commitment for many people. We worked with four different lenders and used quotes from all four to find the best deal. All the lenders presented a competitive estimate, but in the end, we picked the one which met our long term financial goal.
CLOSING COST WHEN PICKING RIGHT MORTGAGE LENDER
Besides saving for the down payment, there are closing costs that sometimes people do not take into account. It usually comes as an unpleasant surprise to many people seeking to buy a home. What is a closing cost anyway? The mortgage closing cost is around 2% to 5% of the home price, and it includes property taxes and mortgage insurance. Closing cost is fees for the services and expenses required to finalize a mortgage. The best financial decision is to pay for closing costs. If applicable, the lender can fold the closing costs into the loan if you are not able to pay at closing. When this happens, you end up paying interest on the closing fees for the entire loan term.
So shop, and find the right lender, compare closing cost fees and interest rates. Sometimes a lender’s interest rate may appear competitive, but that is because the lender may have hidden fees elsewhere on the loan estimate sheet. Review this sheet, and ask them questions on anything you do not understand. While negotiating, they will ask you to send loan estimates from the other lenders. Feel free to do this, especially if the estimates vary greatly.
WILL SELLER PAY PART OF CLOSING COST
Sometimes the seller may pay for part of your closing costs, but be sure to ask the lender what closing cost you are responsible for because this varies by lender. For our closing cost, our seller paid 10,000 dollars towards closing, and we negotiated for an additional 2000 dollars towards closing cost. Overall, the seller paid 12,000 dollars towards our closing costs. Many items on the loan estimate sheet are negotiable, so take your time to review and ask the right questions.
While shopping, you must be aware of the current mortgage rates, You can google this information, and fill a form to receive the mortgage average interest rate. You can be confident that you are getting the best deal in the market when you compare multiple lenders. Keep in mind, even a 0.1% difference in an interest rate can cost you thousands of dollars throughout the life of the mortgage.
In conclusion, to find the right lender, below are the three things you must do:
3 THINGS TO DO TO PICK THE RIGHT MORTGAGE LENDER
- Check current mortgage rates
- Learn how to compare mortgage fees
- Compare loan estimate forms
If you have a competitive credit score, low debt to income ratio, and a substantial down payment, it is fun to negotiate. You have all the power, and all the lenders want your business, so it is your game to play.
RELATED POST >>>>
- STEP 1 HOME-BUYING SERIES-REVIEW CREDIT HISTORY
- STEP 2 HOME-BUYING SERIES-SET A DOWN PAYMENT GOAL
- STEP 3 HOME-BUYING SERIES-CHOOSE A TYPE OF MORTGAGE LOAN
Once you have determined which lender, the next step is to get pre-approved. I will discuss the pre-approval process in my next post. As usual, do not forget to subscribe below and share if you think it will benefit someone.
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