Since all of your focus goes into making sure your credit history is as flawless as it can be, you should also know that there is more to finding a mortgage lender than just interest rates and banks. It is about finding a professional who will guide you through the process of finding a mortgage that is right for you. Traditional banks are just part of the mortgage-lending landscape. Knowing the different lenders that are out there will give you a better chance of buying the home of your dreams and being able to afford it. Mortgage bankers work for a specific financial institution and package loans for consideration by bank underwriters. Technically, it is not a traditional bank, but it will likely be a similar process since mortgage bankers work with larger financial institutions.
Cedar Rapids and the surrounding areas in Iowa have their fair share of credit unions. It is easy to become a member if you work for a specific employer that is associated with a credit union. Sometimes you only have to be related to someone who works for an employer that is associated to become a member. Many credit unions have eased membership restrictions, so you may not even have to be employed with an associated employer to become a member. Credit unions are member-owned financial institutions that offer favorable mortgage interest rates to shareholders. While credit unions may not charge membership fees, there is likely some sort of service fee to keep them member-owned. Most potential homeowners probably do not consider credit unions as viable mortgage lenders.
Mutual savings banks are another option to consider when looking for mortgage lenders. They are locally focused within the community and can be extremely competitive to keep up with the other lenders around them. Savings and Loans are becoming harder and harder to find, especially since a large majority of them closed in the late 1980s and 1990s. They are very similar to credit unions because depositors and borrowers are members with voting rights, including the ability to direct financial and managerial goals. Savings and loans are very consumer-oriented and worth seeking out.
Correspondent lenders are mortgage lenders, per se, but they rely on other lenders, such as Wells Fargo and Chase. In other words, correspondent lenders are local mortgage companies with the resources to make loans, but they will turn around and immediately sell your loan to other lenders, like Wells Fargo and Chase. Selling your mortgage to a correspondent lender allows the referring lender to be guaranteed they will make their money back without a loss. The referring lender likely also makes money from just selling to the correspondent lender.
Once you have narrowed down your mortgage lender choices, there are some steps you can take to making your mortgage easier to obtain. Getting preapproved is probably one of the most important steps you can take. It can put you head and shoulders above other potential buyers. Being preapproved shows the seller that the lender has figured out how much you can afford. Most potential home buyers get preapproved by providing their lenders with a great deal of information about their financial background. This shows the buyer that will be more likely to close because you are willing to share the information up front. Most of the time, potential buyers should be willing to provide Social Security numbers for themselves and co-borrowers as well as bank, savings, checking and investment statements; outstanding debt obligations including credit cards, car loans, student loans and other balances; two years of tax returns, W2s and 1099s; and salary and employer information, as well as how much of a down payment you are willing to put down, including where the money is coming from. This may seem like a lot of information to disclose, but in most cases, the sooner you share this information, the more likely you are to walk away with a mortgage that is completely affordable.
You should become used to asking the right questions and reading the fine print throughout the mortgage-seeking process. Talk to family members and friends about their experiences. Have they made some excellent connections along the way? Many successful home buyers have counted on their friends and family for sharing good information. It also helps if you go out and seek several quotes. This allows you to study the costs and choose what makes the most financial sense for you. No one wants to be caught between a rock and a hard place. Before you sign anything permanent, you want to be completely sure that you can afford the mortgage agreement you can afford. No one wants to enter home ownership with affordability doubts clouding your overall enjoyment of finding your dream home.
Choosing the right home to purchase is likely one of the hardest choices you ever have to make. Once the home is chosen, you want to choose your next steps to obtaining a mortgage carefully. Not every lender is alike. Some will put everything out in the open and have seasoned experts waiting to answer any questions you may have, while others are just interested in getting borrowers to sign on the dotted line. They are just dedicated to getting your signature and whatever commission comes along with it.
Ask around. You likely know many people who own or have owned a home. Ask them what their experiences were like with the lenders. Was it an easy process to find one that would guide you through the whole home buying experience? Are there any lenders your family or friends can recommend? What was the worst part of the experience? Is there anything you can do to avoid similar situations? Can they give you any useful tips to help cut down the costs once you find the lender that is right for you?
Buying a home should not be a painful experience. Entering the home market as an educated potential buyer will help take the guesswork out of getting a good deal. Take advantage of everything a lender has to offer. If they have a website, take a look before you go meet with your lending representative. Perhaps some of your questions can be answered before you begin the process, allowing you to ask the more detailed questions that will help you make a better-educated decision.
