Choosing a Mortgage Lender

In the process of purchasing a home, some buyers get so caught up in price negotiations that they overlook the importance of getting the right mortgage. Paying careful attention to mortgage and closing costs can help you to save on your initial and ongoing monthly expenses. Smart buyers should begin researching the various types of loans and terms available and learn which options best meet their needs.

You can get a loan through banks, credit unions or a mortgage broker. Large banks are reputable and offer competitive interest rates, but may have more stringent lending requirements than some alternatives. Credit Unions and smaller banks may offer more flexibility, but sometimes can't offer rates as low as larger competitors.

Mortgage brokers are service providers who don't lend money directly. Instead, they provide a service by matching your needs with available loans from different sources. A broker's access to several lenders can mean a wider selection of loans and terms for you, and brokers generally contact several lenders for you. Here are aspects to consider when choosing a lender and the loan they offer:

• What information you are required to provide to your lender
• Monthly payments and interest rates
• The loan's annual percentage rate (APR). The APR is higher than the corresponding interest rate because it includes applicable points and other fees, expressed as an annual rate.
• Your down payment amount and total costs of the loan
• Whether your loan is adjustable or fixed-rate
• Whether or not you should pay points (loan origination fees)
• Total fees and what's covered by each fee
• Whether you need private mortgage insurance (if your down payment is less than 20 percent)
• In addition to providing a loan, your mortgage lender should also help you understand your options and help you choose the financing and terms that best fit your needs. Don't be afraid to ask questions. For more information on mortgages, FREE preapproval or a competitive rate quote.
• Buyers and sellers must agree on a mutually acceptable date to close the sale. Buyers should make sure the closing date occurs before any established interest rate lock-in period expires.