How to Pick a Mortgage Lender
With all the lenders out there, how do you know which one to use for your home loan mortgage? Does it even really matter? What are the points you should consider when comparing lenders, and how do make sure the lender is legitimate? This article suggests that who you choose as your lender IS important, and presents some key factors to consider when comparing mortgage lenders.
First, why is which lender you choose important? The most obvious reason, is of course, cost. When you take out a mortgage loan, you incur a monthly payment associated with a large debt. Therefore, you ought to pay close attention to a loan’s cost. And it’s not just the interest rate you have to consider. Make sure you find out about additional fees such as an underwriting fee, an origination fee, an appraisal fee, etc. These fees are combined with the interest rate to come up with the Annual Percentage Rate (also known as the APR). It is the APR that you ought to pay the most attention to.
When you have a tight time frame within which to buy a home, a lender’s speed becomes important. One lender may be able to underwrite the loan in three days and fund it in one more day while another lender may take a couple of weeks or more. Don’t ignore this important aspect of lending.
Convenience may also determine which lender you choose. Will you have to mail documents or can you simply upload them through the Internet? Do you have to discuss your financial situation with someone over the phone, or will the lender’s system help you choose the best loan. Will you have to drive somewhere to close the loan, or will the lender send a notary to your home or office?
After deciding on your top one or two lenders, you may want to confirm the companies’ validity by verifying their license or registration with your state. This can often be done online through the states’ website. You could to go to the Contact Us page and find a Customer Support number or search the site for the state’s Banking Division or Financial Institutions Division. There may be an online search function that will allow you to look up the lender’s registration or license.
You may also want to verify the lender’s business license in the state where its corporate headquarters are located. This too should be possible online.
In summary, here are the points to consider when picking an online lender: Pricing (remember to look at APR), speed, convenience, and legitimacy. Purchasing or refinancing a home is a significant decision. Be sure to consider these points as you make it!
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