How Do I Find the Best Mortgage Lender for Me?

Finding a home begins with finding the right mortgage lender. You want to find a mortgage lender that can give you the best offer, while also ensuring that they’re reputable and will be able to service your loan. Here’s what you need to do to prepare, both before and during the process of vetting mortgage loan companies.

Prepare Your Documents

It’s worth it to go over your financial situation before you even start looking for a mortgage. Assess how much you feel you can spend on housing every month. You might have a clear idea already: If you’re paying $1,400 in rent right now and it’s comfortable to you, then a housing payment of $1,400 shouldn’t be bad. (Though keep in mind your housing payment will include mortgage, insurance, and property taxes.)

Your document you will need to gather include your last tax return and your current pay stubs. Pull your credit report and check your credit score. (Request your credit reports once a year for free from each of the three credit reporting companies at www.annualcreditreport.com.) Ideally, you want a credit score over 720. If there are any errors on your credit report, or any outstanding issues, now is the time to fix them.

Save Your Down Payment

Down payments vary. Most people today don’t have 20 percent to put down. But the more you can put down for your down payment, the better it is for you, and the easier it will be for you to qualify. Still, you don’t need to have your entire down payment before you start looking into your loan options.

Get Prequalified or Preapproved

You can get either prequalified or preapproved at a bank once you have your documents in hand. This tells you how much a bank will let you spend.

Prequalification is less rigorous than preapproval. Under prequalification, you tell them your income, then they look up your credit history and provide an estimate of how much you may be able to borrow. Since the loan isn’t guaranteed at this point, it’s possible your final approval will be for a different amount. However for preapproval, you submit a formal loan application, they dig into your documents and approve you for a specific loan amount.

Choose Between a Brick-and-Mortar Bank or E-Loan

Some banks require you go in. Others offer e-loans that are finalized online, so you never need to go into a branch. Neither is inherently superior to the other; it really depends on what you want to do. Either way, e-loans tend to be more convenient, and brick-and-mortar banks are often more expensive (because of their increased overhead).

Compare Different Lenders

Should you go with the first mortgage lender you see? It’s always wise to compare different lenders, but don’t just focus on interest rates. Things like loan origination fees can vary depending on lender, and some mortgage loan companies can have hidden fees.

Contact a trusted lender, such as Mortgage Investors Group, to get a better picture of what they can do for you.