Buying a home is a big step and a big purchase. And if you’re like most of us, you’ll need financing to make that big purchase – a mortgage loan that you’ll be paying for the next (possibly) 30 years. It just makes sense then to choose the mortgage lender that is right for you. But how do you make that determination? Check out these 5 things to take into consideration when choosing a lender in Sacramento.
1. Competitive Rates
Your first consideration when choosing a lender in Sacramento should probably be the rates offered and their competitiveness. Just a slightly higher interest rate will mean that you pay thousands more over the life of the loan.
“[I]t’s generally recommended to get the lay of the land by looking at various lenders and the rates and fees they advertise. Taking this step may help you understand what the market looks like overall and who may be offering competitive rates.”
Also, be sure to look at “the common loan types offered. Interest rates for fixed-rate loans do not change over the life of the loan. Interest rates for adjustable-rate mortgages can change over the life of the loan and are influenced by the Federal Reserve boosting or lowering their benchmark rate which in turn causes movements in the indexes tied to ARM rates, such as the LIBOR.”
2. Variety of Products
Another thing to take into consideration when choosing a lender is the variety of products offered to make sure they have what will meet your needs. Your specific individual “needs and financial situation can play a large part in which mortgage programs you choose and are eligible for.”
“For example, some lenders require a 20% down payment to qualify for a mortgage. If you can’t pay 20%, lenders may require that you have private mortgage insurance, which covers them in case you default on your mortgage payments. Mortgage insurance premiums vary depending upon many factors.”
If you aren’t able to pay 20% down (which is most of us today), “look for lenders who offer more flexible down payment requirements. Also, consider what term – the length of time you’ll be paying off your loans – works best for you. See what kinds of terms lenders offer and the interest rates that accompany those terms.”
3. Fees Charged
Another important consideration for choosing a lender in Sacramento involves the fees charged. These can add up to much more than you think, so you need to check into them. Here are some of the fees to keep an eye out for . . .
- Broker commissions
- Origination fees
- Appraisal fees
- Credit report feed
- Discount points
Such fees can add substantially to the cost of buying a home. Some will be paid upfront at the beginning of the application process, others at closing, and some may be rolled into the mortgage. But whatever the case, you need to be aware of all the fees a particular lender charges.
So be sure to request a loan estimate from your lender – it will list all the fees. If you need assistance with this, you can contact a Sacramento agent at (916) 949-6929.
4. Type of Lender
Also, when choosing a lender, you should give careful consideration to exactly what type of lender they are. Although a bank is the most common choice, that is by no means your only option, and each type of lender has different pros and cons, for example . . .
- “Larger banks are often able to offer more competitive rates. However, as they have lots of clients you may find they take a lot longer to process your loan. Their terms for acceptance may also be stricter and more rigid.”
- “A local bank will generally give a more personal service, and put the loan through for you much quicker. However, they may have fewer options and services.”
- “Another option for lenders is a credit union. The plus point is that they generally offer very low rates. You will need a great credit score to access them and often need to be part of the union itself.”
- “Finally, you can choose online lenders. They offer low rates and often have some other excellent deals. However, they have no physical premises so all customer service is online, which may be a problem.”
5. Speed of Closing
And you’ll definitely want to consider speed of closing when choosing a lender. No one enjoys a delayed closing simply because the lender is dragging its feet.
“Time is essential once you find a property you want. The last thing you need is to spend an age waiting to move in. A long wait may also mean you end up losing out on a property to someone who can get in before you.”
Be sure, then, in choosing a lender, to look for one that offers ways to expedite the process. “For example, you may be able to get preapproved for a loan, which takes care of a lot of potentially time-consuming paperwork upfront before you’ve even started shopping for a home. Ask your lender how much time their closing process usually takes and what you can do to expedite it. Especially if you’re crunched for time, their answer can have a big impact on which lender you choose. After all, the faster you’re financed, the sooner you’ll be able to move in.”
And Don’t Forget That a Sacramento Agent Can Help
Choosing a lender, then, is no insignificant and no simple task. It pays to get the professional assistance you need. Your Sacramento agent may not be a financial advisor, but she can provide valuable assistance and guidance throughout the entire home-buying process. If you want assistance from choosing a lender to closing, contact us today at (916) 949-6929.