If you’re a first-time homebuyer, finding the right mortgage lender may seem a daunting task. Choosing a mortgage lender is certainly one of the most complicated decisions you will make regarding your home mortgage. The task of picking the right one is intricate because plenteous mortgage lenders are willing to accept your loan application.
However, just like shopping for a car or choosing an insurance policy, it is also necessary to do some research and compare your options to find the best deal. Selecting the best mortgage lender for your needs is crucial because you will be encumbered with this mortgage for years to come.
It is noteworthy that a good mortgage is not simply about finding the lowest rate; you also need to consider other factors. As a first-time homebuyer, you should look for mortgage lenders who offer government-backed loans, low down payment options, reasonable fees, and financial assistance programs.
We have listed five tips to help you pick the right mortgage lender when buying your first home in this post.
1. Check your credit score and history
If you’re a first-time homebuyer, make sure to educate yourself about the credit score requirements. This is because your credit score and financial history play a vital role in determining your mortgage rate. Lenders review your credit score to find out your debt-to-income ratio, which in turn determines how much they’ll let you borrow.
There are many different types of mortgages and mortgage lenders. While some lenders only offer loans to borrowers with great credit scores, others happily welcome borrowers with lower credit scores. So, before reaching out to any lender, it is best to first check your credit scores so that you can have an idea of what to expect from a lender.
2. Look for first-time homebuyer programs
To help first-time homebuyers, some lenders tie-up with state agencies to offer special programs such as rate discounts or down payment assistance to provide an affordable loan. Often these programs are available for public servants or those with student loans. You can also find a list of the best VA loan lenders online as veterans have assistance. Such mortgages are handled by typical banks, credit unions, and non-bank lenders, and the eligibility requirements depend on various factors. So, make sure to inquire in advance about any such program.
3. Compare interest rates and more
Your ultimate goal is to find the lowest rate, so make sure to compare the rates of various lenders. Moreover, to better understand what you’ll pay over the life of the loan, compare annual percentage rates.
In addition to this, the fees charged, such as application, appraisal, or loan origination fees, varies from lender to lender. Consider applying to at least three different lenders, so you can compare offers and get the best deal. Also, ask about how much down payment is required.
4. Think about hiring a Mortgage Broker
For first-time homebuyers, the hiring services of a mortgage broker may seem convenient because they perform all the complicated and tiring work related financing and gets you the best mortgage deal. However, make sure to consider the drawbacks of working with a mortgage broker as well. Hiring a dodgy broker may result in paying more rates than what you have found by yourself. So, take a little time to research, ask for references, and find a reliable and experienced mortgage broker only.
5. Find the mortgage which fits your needs
Once you determine what type of loan you need, your search for the right mortgage lender can somewhat get simplified. often for instance, conventional mortgages are not guaranteed or insured by a government agency which means the lender isn’t going to hold onto the loan for very long. This is because some lenders often specialize in certain types of loans.
Buying a home is a huge investment, so make sure to take your time and choose a lender who will ensure that the mortgage process goes as smoothly as possible.
