Last Updated on May 21, 2021 by MoneyVisual
When someone makes the decision they want to buy a home, it can be quite exciting. After all, getting to pick out the perfect location, feature, yard and more is something people dream of.
However, before starting the process, it’s a good idea to secure financing. This is going to require a future-homeowner to find a quality mortgage lender.
Unfortunately, not all mortgage lenders are created equal, which means it’s up to the home buyer to find the best service for their needs. Keep reading for some helpful details on how to do this and get the right lender for the situation.
Credit Score Awareness
Before trying to cipher through a choice of lenders in the area, it’s a good idea for a home buyer to get to know more about their credit rating. After all, this is going to significantly impact the loan they are offered.
It’s crucial to know what a person’s credit score is and if any work is needed to improve it. There are some free methods to get a person’s credit rating so take advantage of them.
There are some loan programs that require a minimum credit score, so be sure to keep this in mind, too.
If the score isn’t quite high enough, then it’s a good idea to put in some effort to bring it up. While this can take a few months, or longer, to achieve, it’s worth it when it comes to lower interest rates and fees for the mortgage acquired.
Understand the Difference Between APR and Interest Rate
A huge distinction that any future home buyer should know before they start comparing lenders is what the difference between APR and interest rates are.
The interest rate is the price paid for borrowing money. It’s shown as a percentage of the principal amount being borrowed.
APR, or annual percentage rate, on the other hand, is the total cost charged when borrowing money. While this includes the finance charge and interest, the APR also includes any fees that are going to be paid to actually borrow the money. An example of this is a mortgage origination fee.
Look Past the APR
While interest rates are important there are a few other things to ask potential lenders about.
For example, ask how the lender communicates with their clients – email, phone, etc. It’s also important to find out how quickly they respond to messages. If a person has to wait days, or longer, for a callback, it can be extremely frustrating.
Other things to ask about include turnaround times, the fees that need to be paid, the down payment required, etc. While the down payment is often as low as three percent, there are some lenders that require more.
Finding the Right Lender: Now You Know
When it is time to find the right mortgage lender, there are more than a few factors to keep in mind. It is crucial to consider all the factors here, as they are going to help a person narrow down the options and ultimately find the lender offering the most value. Keep in mind, the lender offering the most value isn’t always the one with the lower rates. Be sure to learn all the specifics of any loan before signing on the dotted line.