Before shopping for a house, it’s better to shop around for the best mortgage lenders. Get tips on finding the best mortgage lenders for you, and see my top picks for different needs.
But how to find the best mortgage lender for myself? The home-purchasing process can seem overwhelming. For most people, it’s the largest financial purchase of their lives — and after diligently searching for the right house, mortgages can often be an afterthought.
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Finding The Best Mortgage Lenders
There are at least four important steps to follow to ensure I pick the best mortgage lender.
1. Shop and compare lenders
Let’s use math to illustrate the missed savings by not buying mortgage rates.
For instance, my primary financial institution (where I have my checking account) offers me a mortgage refinance rate of 3.7%. I took the rate but didn’t see the online-only lender offering 3.3% on a $300,000 mortgage. This difference in interest rates costs me an additional $24,000 over 30 years.
Those who are looking for mortgage refinance options should definitely investigate lenders via an online tool like Credible, where they can simply compare rates and lenders.
2. Ponder on the fees associated with the lender
When vetting lenders, don’t get dazzled by mortgage rates on an individual basis. I should also ponder on the fees associated with the refinance with each mortgage lender. Here are the most common kinds of fees associated with refinancing a loan:
- Application Fee
- Origination Fee
- Home Appraisal
- Title Fee
- Credit Report Fee
Few of these fees are non-negotiable, but I’ll definitely check the application fee and loan origination fees. Only because one lender offers a lesser rate, the fees associated with that lender may offset any prospective financial advantage accompanying the interest rate.
In order to streamline the refinance and minimize out-of-pocket costs, lenders may offer “no fee” loans, which is where they accumulate the closing costs of the loan into the overall balance. While this may lesser my out-of-pocket contribution, I’ll still be paying those costs over time, which eventually adds to the total cost of the mortgage, so pay attention.
Furthermore, if I’ve cash on hand, I’ll definitely use this to lesser my interest rate. By paying “points” (a point costs a determined percentage of my mortgage, for suppose, one point equals one percent of the mortgage price), I’ve to pay more upfront at closing, but lesser the interest rate of my loan.
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