Best Tips For Finding And Choosing A Mortgage Broker Or Lender

Buying a home is never a simple matter, especially for a first-time homebuyer. This is a massive investment, and to a lot of homeowners, their home (at least their mortgage and their equity in this home) is the most valuable asset that they have. For this reason, it’s important that you find the loan that offers the best possible terms. Here are some tips to help you in this search.

Your Own Starting Position

The first thing you need to do is put yourself in the shoes of a lender and examine how they will perceive you as a borrower. There are several things to consider here. First, your credit history. This is a number used to determine how vigilant you are with all your payments. The most commonly used is the FICO score, which is a number from 350 to 850 used to determine your credit trustworthiness.

Second, you need to consider the assets that you already own as collateral. This is a problem for a lot of first-time lenders and first-time homeowners. These are the so-called secured loans, and seeing as how they’re already guaranteed by collateral, the terms that you can look forward to are far superior.

Third, your income-to-debt ratio will play a key part when determining the loan and loan terms that you can expect. You see, your income-to-debt ratio is something that even bad credit lenders are going to ask about. If this is particularly dire, you might not be able to secure favorable terms. This means that you’ll have to turn towards alternative solutions and fundraising methods.

Look for Special Programs

If you’re a first-time buyer, when talking to potential mortgage brokers, it might be a good idea to inquire whether they provide first-time buyer programs. There are all sorts of programs available for those who know what to ask for. For instance, there are grants for veterans, students, public servants, etc. It just comes down to exploring and comparing your research.

It’s important to mention that there are even some grants for energy-efficient homes. This is especially important if we consider that the future might be more oriented towards green cities.

The benefit of these grants lies in the fact that they’re more affordable and offer some terms that may heavily favor you. For instance, you may have a particularly long grace period, which would allow you to sort out your affairs before you start repaying the loan.

Another important thing you might want to consider are lenders who offer government-backed loans. Sure, these are a bit harder to find and may not always be available, but the terms they offer are more than worth it.

Compare Loan Terms

Different lenders offer different loan terms. Factors like APR, loan term duration, minimum/maximum loan amount, origination fee, etc., are just some of the things to look out for. If you decide to note down these factors with every lender you encounter, it will be quite easy to compare different lenders and evaluate their offers in a more accurate (and intelligible) manner.

While making manual comparisons is one way to approach this, you can also take a different approach and look for a comparison tool. This way, you’ll have the software do the bulk of your research.

Another thing you can do is use the tool that the majority of these lenders have on their page. In this tool, you can just enter your credit score, the loan you want (with the amount and APR), and what you’ll get is a monthly credit payment that you can expect. This method is far more convenient, seeing as how it doesn’t rely on you having to make percentage conversions in your head. Instead, you get a figure and make an evaluation of whether you’ll be able to pay it or not.

Use Different Research Channels

In order to find the right mortgage broker, you’ll have to use as many different channels as possible. First, you need to ask locally. This gives you a bit shallow pool of potential lenders. However, it is a far more reliable research method. Why? Well, first of all, it gives you local examples which you can check and verify.

You should also search online. The beauty of online research lies in the fact that, with a specific-enough keyword, you can filter out those options that meet your most important requirements. If these lenders are well-known in the industry, you might even be able to find elaborate reviews that will give you a better insight into what you’re dealing with. Keep in mind that even a whole review is 3-6 minutes of reading time. For a decision as big as this, this is more than worth it.

Lastly, you need to understand that every loan is different, and you can’t read everything on the website. So, if you have any dilemma, why not just write an email and inquire about it. You don’t have to wait until you’ve applied to contact the platform directly. This is really the best and the most reliable way to get the information you need.

Don’t Be Lazy

When it comes to your mortgage, this is an expense that you’ll have to repay for years and years to come. Therefore, you need to do your research properly. No, looking at two or three different lenders is not enough. This might not even be enough for you to figure out industry averages. After all, this sample group is not big enough to make any valid conclusions.

This research will not take minutes or even hours but, ideally, days of your time. It is a major decision, and being too eager to “just get over it” might land you into a long-term commitment that you may come to regret.

Even after you believe that you’ve made your decision, it’s still worth taking a couple of days and returning to some other offers. You never know what you’ve missed. Remember, you’re never in so big of a rush that you have to make a decision in a matter of hours, at least not in these matters.

Look for Pre-approval

You need to know that you have the money available long before you start looking for your future home. Even if you don’t have the money in your account, there are two things you need to ensure. First, you need to set your optimal budget. Second, you need to get pre-approved for the loan.

Previously, we’ve discussed at length the importance of finding the lender that fits your needs. Now, you need to make sure that you meet their criteria.

The best thing about this stage lies in the fact that, during the pre-approval stage, the platform/lender usually performs a soft credit pull. This means that inquiries into your credit score during this stage won’t negatively affect your credit score.

In Conclusion

In the end, you need to understand that this is not an exact science. Everyone’s personal score is different, and industry standards evolve over time. While it’s good to know what you’re looking for from the very start, it’s also smart to keep an open mind. Start your research in time, and remember that this is a decision that you can’t afford to rush.