Finding the Right Lender
Right At Home
Daily: Finding It: House-Hunting
By Margaret Crane for Right at Home Daily
You've found the house you want and, fortunately,
you can afford it. Now it's time to shop for a loan, akin to car shopping.
How do you find the right lender? Play one lender
against the other to get the best rate. The task can be daunting, however, with
so many competing lenders and mortgage types from which to choose.
Break
the process into manageable parts. Your mortgage should match your
personal finances, so be prepared to answer a number of questions, like: How
much can you afford? How much can you put down? What are your assets and liabilities?
How long do you anticipate living in the home? What is your tax rate? And do
you qualify for the mortgage interest deduction? If you can answer these questions,
you'll have an easier time finding a good lender and completing the process
efficiently.
The media is filled with interest rates. Check
the real estate or business section of your local newspaper, on the Internet,
in ads, flyers and on the radio and television. You should also talk to friends
and neighbors about where they got their mortgage. Call other financial institutions
(commercial banks, savings and loans, mortgage companies, and credit unions)
for rates and loan program details.
Once you choose a lender, bring your latest tax
return, proof of income, debt, savings and investments. If you're self-employed,
your lender will want to see your last two years of tax returns plus a year-to-date
statement of profit and loss for your company.
To apply for a loan is a detailed process, so
make sure you find a reliable mortgage lender who will follow through to the
very end; one who will show up at the closing with the check in hand.
TAKE IT AND RUN
Before you borrow consider the following:
1. To find the best lender, you have to shop
around. Talk to at least five different lenders before choosing one.
2. While the Internet should offer the cheapest rates,
your local bank or mortgage broker may actually have the best deals.
3. Compare loans on an apples-to-apples basis. If
you ask one lender for a no-points, no-fee loan and another one about the cost
of a loan with two points, it'll be difficult to determine which loan is best
for you.
4. Consider hidden costs such as prepayment penalties.
If you're going to sell your home or refinance your loan before the penalty
period is up, don't take that loan option.
