Finding the right mortgage lender is the single most important step in buying a house. You need to find a professional with exceptional customer services and the best deal for your purchase.
As you search for lenders, there is no shortage of options. There are several online lenders, mortgage brokers, and banks ready to take your application.
You need to have a thorough understanding of lender types, the process, and technical terms used by the professionals. It gives you an edge over the homeowners who don’t know the important information.
Here is how to find the Best mortgage broker in College Park MD.
1. Learn About Different Types Of Lenders
Let us look at different types of mortgage lenders in brief detail.
As the name suggests, direct lenders will provide the mortgages directly to the consumers. There is no third party involved in the lending process. The direct lender could be a bank, online entity, or credit union. You won’t have to pay the fees of mortgage brokers when you are working with direct lenders.
The application process is much easier when you are dealing with direct lenders as you can have all the information in one place. It is highly recommended to compare the loans offered by different direct lenders before you make the deal. For the beginners, it is best to consult a reliable mortgage broker instead of direct lenders.
Imagine the mortgage brokers as matchmakers between lenders and buyers. They are licensed professionals who help the home buyers find loans that best suit their budgets. These professionals charge one or two percent of the loan amount.
They are either paid by the lender or the buyers. A broker is not responsible for making lending decisions but communicating them between the two concerned parties.
Wholesale lenders are the exact opposite of direct lenders. They never directly interact with the borrowers. They mostly work in association with mortgage brokers to market their offers at discounted rates. The broker is responsible for completing the mortgage process. Make sure to check the online reviews and ratings of each broker.
These lenders fund their own loans but they sell them to larger institutions as the loan closes.
You can also borrow money from hard money lenders or private investors. They provide short term loans. A lender generally takes a closer look at your financial stability to lend you the money whereas hard money investors focus on the value of the property. It is not a recommended option for first-time buyers.
2. Improve Your Credit Score
The struggle to find the best deal starts long before your hunt for a mortgage broker. It all starts with a good credit score offer your finances a checkup and fix them. Once every year, you’re entitled to a free credit report from each of the three main reporting bureaus – Experian, Equifax, and TransUnion. Visit AnnualCreditReport.com to get your free copies.
If the credit score is lower than your expectations, check for any errors or late payments. Get these issues fixed before you search for the best mortgage deals.
3. Narrow Down The Budget
You need to have an accurate idea of how much money can you pay every month. Even if you qualify for a certain loan, take time to check your incomes and expenses.
Lenders pre-approve the loans after checking the revolving debts and outstanding loans based on your gross income. They don’t take your utility bills into the accounts. Understanding your budget limits gives you a better chance to find the right mortgage lender for you.
4. Know Your Options
Upfront research can change the whole process for you. If you speak the same language as the mortgage lenders and understand the technical terms, discussing the terms and conditions gets easier. Spend hours on the internet to search for the mortgage types and their pros and cons.
Check online resources to find the most trusted lenders. Know your options well to make informed decisions. Keep in mind that an unnecessary rush can lead to missed payments, paying more money in interest, and even the potential to lose your home!
5. Rate Shop With Several Lenders
Closing the deal with the first lender you meet is never a good idea, especially for a beginner. You need to check the terms and conditions of different types of lenders. Shop rate with different lenders to get the best deal on interests and monthly payments.
According to a recent survey, homeowners can save up to $3000 by requesting quotes from five different lenders. If you don’t want to leave money on the table, check the online resources developed to compared different lenders in your area. A mortgage broker can do the legwork and provide you with the best options. Compare the bottom line costs.
6. Apply For Mortgage Preapproval
Applying for mortgage pre approval saves you a lot of time and inconvenience. Apply it with three to four lenders to get accurate loan pricing. Each lender will go through your debts and financial statements. Once you get the pre approvals, it is best to avoid moving money in banks and pulling out new credits.
7. Read The Mortgage Documents Thoroughly
Reading the mortgage documents can be tedious and boring. But if you don’t look at them closely you are more likely to miss out on important information.