Selecting the appropriate mortgage lender is a crucial step in the home-buying process. Not only will it determine what loans you qualify for, what your interest rate and fees will be, but how much of a down payment you need. Furthermore, it could affect other costs like property taxes or homeowners’ insurance in the long run.
Finding the ideal mortgage lender requires comparing offers side by side. Doing this will give you an accurate assessment of what loan best suits your needs and help save money on interest rates, fees, down payments and other associated costs.
Lenders play a major role in the home buying process, so it’s essential that you select one who will be honest and upfront with you. Without all necessary information or misrepresenting your financial standing, you could end up facing difficult choices down the line.
Credit Requirements
A mortgage lender will first review your application based on your credit history and score. The higher your score, the easier it is for you to qualify for a mortgage loan; however, each lender has their own criteria for what constitutes good credit score. Therefore, it’s wise to inquire with them beforehand about how you can improve your score before beginning the application process.
Income Requirements
Your monthly mortgage payment depends on a variety of factors, such as how much money you have saved for a down payment and other debts you owe. Be sure to factor in other expenses like utilities, gas, day care, groceries and insurance when making your calculations.
When considering a government-backed mortgage, such as FHA or VA loans, it’s wise to inquire from your mortgage lender about their eligibility requirements and how they determine which mortgages are suitable for you. A reliable mortgage lender will have extensive knowledge about these types of loans and can guide you through the application process with ease.
Your Down Payment Requirements
When buying a home, most buyers must put down at least 20% of the purchase price. This amount may be fixed or vary based on loan type and location of the house.
Some buyers may need to utilize private mortgage insurance (PMI), a policy that safeguards lenders in case of default on your loan. This cost will be separate from your monthly mortgage payment and can add up quickly.
Your Loan Officer
When selecting a mortgage lender, ensure they have an experienced and responsive loan officer who can answer all your questions and explain all the various home-buying options available to you. This person will be your main point person throughout the process, so make sure they’re on board as part of your team.
A bad loan officer can be incredibly frustrating, so it’s wise to find one you feel confident working with and who will provide you with support throughout the entire home-buying process.