Choosing a mortgage lender is an important decision. While picking the first lender you find may feel like you’re simplifying the process, this may cost you significantly in the long run.
The right mortgage lender for you will make it easy to communicate and ask questions. They will present you with all your loan options, and help you discover the right choice for your unique life.
Before choosing a mortgage lender, here are five questions you should ask to simplify your decision and be on your way to the perfect loan.
1. What is My Credit Score?
Prior to choosing a mortgage lender, you have some homework. To have the smoothest lending experience, you need to understand your financial situation and what needs work.
Your credit score is a determining factor when it comes to your loan options and terms. You are eligible for a free credit report every year from each credit reporting company.
Use this report to evaluate your credit history and review for any late payments, high balances, or even errors that are contributing to a lower score. Report these errors to the credit bureau.
While you may still have loan options with a lower credit score, the most term flexibility and lowest interest rates typically come from a higher score. You don’t want any surprises when you talk with a lender: Take control of your score now.
2. What is the Required Down Payment?
Working out your budget prior to choosing a mortgage lender is helpful in determining the right options for you. You could get mortgage approval but it may push your budget to its limits if you’re not aware of what you need.
Consider what monthly payments would work best for you. Factor in utilities and other expenses and see what’s left. Then, evaluate your savings. What can you afford as a down payment? Will you still be able to put money away each month?
Search for potential lenders who allow down payment amounts you can comfortably afford. Some lenders, including River City Mortgage, offer conventional loans with as little as 3% for a down payment, and FHA loans for 3.5% down.
Remember that down payments less than 20% for conventional loans means you will pay private mortgage insurance (PMI), but for many borrowers this is worth it for the time being.
3. Does the Lender Have Good Reviews?
A quick internet or social media search for a lender can provide you with valuable feedback from other borrowers.
Evaluate the comments to see if they mention benefits or drawbacks that are important to you, such as the level of professionalism, ease of communication, or efficiency. Some lenders may provide testimonials on their own website.
Beyond web reviews, you can ask the lender directly for referrals, or consult with your circle of friends, family, and coworkers to see if they have a recommendation.
4. Which Fees Should I Expect at Closing?
Don’t let there be any surprises at closing — if you are unclear about the fees and other costs associated with closing on your loan, ask your lender.
Lenders are required to provide a loan estimate within three business days of your application. This will detail your closing costs. After you review the costs from your estimate, ask clarifying questions.
Closing costs might include:
- Appraisal fees
- Loan origination fees
- Title searches
- Credit report charges
- Home inspection
- Property taxes
- Mortgage insurance
These costs usually end up being around 2% to 4% of the purchase price. Compare the loan estimates from your potential lenders to understand the fees and find which option fits into your budget.
5. Is it Easy to Communicate with the Lender?
Communication with your lender should be easy.
If you feel too intimidated to ask questions, are frustrated by slow response times, or don’t feel like the lender is being upfront with you, they may not be the right lender for you.
Consider also how the lender prefers to communicate with you. Does this match how you prefer communication? For example, if the lender insists on calling you whenever it’s convenient for them, but you have expressed that email is preferred due to your schedule, they’re not respecting your preference.
The right lender will be interested in building a relationship with you so communication is comfortable, efficient, and respectful. You will be working closely with this person throughout the loan process, and need to be comfortable doing so.
Next Steps: Confidently Choosing a Mortgage Lender
After taking these questions into account and evaluating your finances, budget needs, and communication preferences, you will be ready to confidently choose your mortgage lender.
The professional mortgage lenders at River City Mortgage are ready to help you quickly get pre-approved for the right loan for your unique situation.
Call us today to get started.With our team of authentic, committed mortgage professionals, you can feel confident that we will help you find the simplest, most affordable financing solution for your home.