One of the first steps to buying a house is securing a mortgage loan. But how do you know who to trust as your lender? It's a big decision, and more goes into it than simply finding the best loan terms. Read on for our tips on how to choose a mortgage lender.
Which Type of Loan is Right for You?
Before we get into choosing a lender, let's cover some of the primary types of mortgage loans:
There's no one-size-fits-all solution when it comes to mortgage loans, and no one loan type is inherently superior to another. Talk to your mortgage lender to determine which loan is right for your situation.
How to Choose the Right Lender
Just as there are several types of mortgage loans, there are different types of lenders. These include:
You might choose to borrow from a conventional bank or credit union if you already have an account with the respective institution. However, nonbank mortgage lenders issue more mortgages than most other options.
These institutions tend to specialize in mortgage loans. Perhaps more appealing to borrowers is they often tout the ability to process mortgage loans quickly. Additionally, nonbank mortgage lenders are often more forgiving of borrowers with blemishes on their credit reports and other factors that may turn away a bank or credit union.
Mortgage brokers and mortgage marketplaces are similar in that they allow you to see quotes from multiple lenders before making a final decision. With the former, you'll have access to an actual broker who can help you throughout the process. The latter, however, typically functions as an online marketplace which serves up the quotes.
The Details Matter
No matter which type of lender you select, it's wise to collect quotes from several sources. You'll also want to ask some of the basic yet critical questions – what will my monthly payments be? What can I expect in terms of fees? Which expenses go into my monthly payments?
When considering interest rates, don't let the number you see in promotional emails or on websites fool you. Advertised interest rates are often what's possible in an ideal situation. In other words, you may not meet the criteria for the rates you'll see advertised. And that's fine!
It's also important to determine how your lender communicates and if it matches your preferred style. Would you rather get text updates, or do you prefer a phone call? Does it not feel official unless you're in person? Most lenders offer a variety of communication options, so find the one that suits your style.
Choose the Mortgage Lender that Works for You
At the end of the day, choosing the right mortgage lender is subjective; what's right for you won't be the solution for someone else. As long as you do your due diligence, set proper expectations, and explore all your options, you'll end up with a lender you can trust to process your mortgage loan.
If you're ready to start down the path towards pre-approval or you're curious about the process, speak to someone from Watson Mortgage Corp.