Do you plan on buying your house in all cash?
If you said yes, then congratulations—you can stop reading now. For most people the reality is that you only have enough for a down payment. This means that you will have a mortgage on the remainder of the property. Following the traditional path to purchasing a home, your lender will inevitably be a bank, credit union, or something to that effect.
Despite being in the earlier stages of the home buying process, it’s very important to have financing lined up. This minimizes hiccups along the way. A great way to ensure that your financing options are solid is to find a loan officer or mortgage broker.
These are the people who help you throughout the financing process by doing things such as look into interest rates and also create your pre-approval letter to certify that you are able to buy a home within a given price range.
Confusingly enough, there are distinctions between a mortgage broker and a loan officer. In short, a mortgage broker looks into various banks to get quotes on things such as interest rates. A loan officer usually works for one specific bank. Each has its pros and cons.
The important thing to know is that finding the right person is crucial. As you can probably imagine, loan officers and mortgage brokers come in all shapes and sizes. There are good ones and bad ones. To find the best person for the job, there are 3 suggested options you should investigate. Be sure to look into each option and even consider combining them.
Deciding whether to find a lender or an agent first is a bit like answering the question: “what came first, the chicken or the egg?”
Although you could choose your lender first, it may be to your advantage to choose your agent first. An agent’s primary responsibility is to give you the best buying experience possible so that you actually buy something. In contrast, a mortgage broker and loan officer’s primary responsibility is to sell their product (a loan). With this in mind, let’s explore why an agent’s recommendation will be beneficial to you.
If you have the best agent (and you should if you interview them correctly), then wouldn’t they know the best at everything else?
Great agents know great mortgage brokers and loan officers. An agent works with so many different brokers that they can more clearly identify a good one from a bad one and save you a lot of time. They’ll know which ones are best at educating first time home buyers. In addition, they’ll have a good idea of who the most responsive people are. This can’t be understated when it comes to a quick turnaround on a pre-approval. It can be the thing that holds you up when bidding on a house if not.
At the very least, you should look into any recommendations given by your real estate agent.
Would you rather take a stranger’s advice or get it from someone you trust?
Getting recommendations from friends and family can give you a sense of assurance. Like a real estate agent referral, they will probably only do so if they truly feel that it was a good experience.
When asking around, there’s only 1 thing you need to ask your friends and family: why? Understanding what makes a good lender can give you insight into what they value. If you values line up, it’s probably wise to investigate further.
Never follow advice blindly, be sure to talk to each mortgage broker and loan officer that’s recommended. The referral is only a starting point to get you headed in the right direction.
Perhaps you’ve exhausted your referral network. Maybe you’re new to an area. Whatever the case may be, it’s always a good idea to do some independent research. Here are 3 tools that can help you in this process.
This will give you a general sense of what to look for in your search. It breaks down distinctions between lenders and also gives alternative solutions.
As indicated in the title, this article includes tips to find the best lenders when doing your individual research. In particular, focus on learning how to avoid fees and differentiate each seemingly similar option.
Simply plug in the name of a mortgage broker or loan officer. If they’re licensed, you’ll be able to see basic information about them here.
Having a lender ready from the start will help your home buying process progress smoothly. Make sure that you do your research and find the best fit for your situation and needs.