Deciding to purchase or build a home is a huge consideration, as is choosing a mortgage company to assist with the financial aspect. Keeping a few key elements in mind will undoubtedly help make this decision a less stressful event.
Direct Lenders vs. Mortgage Brokers
One of the first things homeowners (or prospective homeowners) need to understand is the difference between direct lenders and mortgage brokers. Direct lenders work to encompass all aspects of the home-buying process. They are, for all intents and purposes, lending their own money to the homeowners. Many times they will offer in-house programs, and generally make the final decisions regarding a mortgage loan. Mortgage brokers, on the other hand, represent a variety of different lenders and feature various programs.
Finding a “Comfort Zone”
Once homeowners begin the process of buying or building a new home, they quickly realize a heightened stress level accompanies the task. In order to make things a bit less stressful—or at least manageable—experts recommend speaking to more than one mortgage company, keeping a lookout for one that provides a certain comfort level.
When looking for the right lender representative, be sure to choose someone who has good listening and communication skills and also works at forming a relationship with you, since this can be a long process.
Likewise, the Mortgage Bankers Association suggests making a list of lenders to research, starting with those used by family or friends, or those recommended by homeowners’ own banks or credit unions.
Keep Local Ties
Homeowners should also make it a point to keep their mortgage ties local; too many times, people get involved with a company that ends up operating from elsewhere in the United States. When there’s a problem, it can be difficult to get help or to have the problem resolved quickly.
This often results from homeowners researching and finding a terrific mortgage rate via the Internet; initially, the situation doesn’t seem to pose a problem, but when the homeowners need to work closely with a representative, the distance may prove to be a great inconvenience.
In some cases, mortgage companies will “sell” their loans to another mortgage company—something the consumer has no control over. Be sure to do your homework, and find out if the company you’re interested in using participates in that practice. Mortgage companies must divulge their history of selling loans—or not—for three previous years.
More than anything, it’s important for the homebuying consumer to shop around and do research. Working with a mortgage company representative you feel comfortable with ensures a great start to the home loan process. Maintaining that level of comfort, and keeping communication open is another way to reduce the stress level and foster a positive home buying experience.
Tips To Avoid Surprise Mortgage Costs
1. Choose a trusted industry professional with whom you feel comfortable, and who will walk you through the loan process, answering all your questions
2. Review the Good Faith Estimate provided by the lender. This will outline charges you’re likely to encounter in loan settlement and closing
3. Don’t ignore fine print. Read documents thoroughly, including the “fine print” details, which can include disclaimers addressing the possibility of hidden costs, penalties, or other unexpected fees
