Financial institutions usually offer innovative financial products to get an edge over the competition. That is why the loan products they offer differ greatly. When you need to buy a house, you will most likely need financing. Since there are many lenders out there, you must compare the terms and conditions they offer on their loan products. This will help to ensure you find the best lender for your needs. Ideally, you should not rush to make a decision when carrying out your research because you don’t want to make a mistake. After all, a mortgage is a long-term financial obligation that can have serious consequences if you make poor decisions. Tundra Mortgage Brokers has a team of mortgage specialists who can help you find the most suitable home loan for your needs.
What to Consider When Comparing Lenders and Brokers
1. Down Payment
Lenders rarely offer 100% financing, unless they are issuing VA, FHA, or USDA home loans. Therefore, borrowers have to make a down payment to secure a home loan. Since most borrowers have limited finances, most of them may not be able to pay a 20% down payment. If what you can afford is only 10% of the purchase price, you should only consider lenders who can offer 90% financing. Therefore, you will need to do a little bit of research to identify the most suitable lenders based on their down payment requirements. When dealing with a broker, be sure to compare the down payments of the mortgages they present you with before making a decision.
2. Mortgage Rate
Every lender will quote a different rate of interest on their mortgages. This will depend on a variety of factors, including the credit profile of the borrower, loan term, down payment required, and other factors. The differences in mortgage rates can translate to thousands of dollars in loan payments over time, so you need to do some research to find lenders with the lowest mortgage rates. When working with a broker, you also have to compare the interest rates of the mortgages they present you to ensure you find the most affordable loan.
3. Mortgage Insurance
Lenders usually charge mortgage insurance premiums, which are based on the value of the property. The premiums charged by different lenders should be compared because you are searching for the most affordable loan on the market. After all, premiums increase the cost of the loan, so the lower the premiums the better. Consider making a bigger down payment if it can reduce the premiums. That said, you have to do a comparison of the premiums charged by different lenders on their mortgages to find the right lender for your needs.
4. Processing Speed
Some lenders can process and approve loan applications in just a few days. If everything is in order and the borrower is already pre-qualified, it would take most lenders just a few hours or days to approve the mortgage. If you are looking to secure a hot deal quickly, the processing speed of a lender would be a key factor of consideration.
5. Types of Mortgages Offered
There are numerous types of mortgages being offered by lenders. For instance, there are state-backed mortgages that require zero or low-down-payment as well as commercial mortgages that rely heavily on credit scores and come with a huge down payment requirement. State-backed mortgages are usually meant for individuals with a low income. Choosing the right mortgage is the key to buying a home cost-effectively and conveniently.
The Importance of Working with a Mortgage Broker
Mortgage lenders usually provide the public with a lot of information about their products through brochures and their websites. However, consumers still require additional information as well as the definition of the jargon used by lenders. Mortgage brokers are professionals who can disseminate information from lenders to prospective borrowers. They can also do market research to identify the best mortgages for different types of consumers.
When looking for a suitable home loan, you need to hire a mortgage broker to help you with the search. The following are key factors to consider when comparing brokers:
i) Independence
You do not want to consult a mortgage broker only to be led to a specific lender they work with. For this reason, you should only consider hiring independent brokers. This is because they have the best interests of the borrower at heart. Contracted brokers are simply agents for mortgage companies, so they may not be able to help you find the best deal on the market.
ii) Licensing
Only licensed brokers deserve to be given special consideration. This is because licensing is proof of professionalism. It also shows that the broker adheres to the highest standards of professionalism. This means that they can offer the highest quality of service.
iii) Reputation
Brokers who have consistently helped clients find the best home loans for their needs usually get high ratings and plenty of positive reviews as well as many testimonials. When searching for a suitable broker, therefore, you need to read client reviews and check the ratings given to different mortgage brokerage firms. The top-rated brokerage firms with the highest number of positive reviews deserve to be given special consideration.
