If you are thinking about buying a new home, then this is an exciting time; however, buying a home is also a big decision. For this reason, you need to make sure that you take the time to get this decision right. That also means working with the right mortgage lender. Unfortunately, there are a lot of common mistakes that homebuyers may make when looking for a lender. Understand these common pitfalls so you can make sure to avoid them.
1. Selecting a Mortgage Lender from the Internet
There are numerous websites that advertise loans online. They even advertise how easy it is to find and close a mortgage. They could even post a litany of positive reviews. At the same time, these online mortgage lenders do not have someone available if something goes wrong in the process and makes it hard to get a hold of someone. There is nothing wrong with looking for a mortgage online; however, it is definitely a good idea to find someone locally who will look out for all aspects for your homebuying process, making sure nothing goes wrong. It is always better to work with a local lender.
2. Working with a Large Mortgage Brokerage Firm
If you need help finding the right lender, then there is nothing wrong with that; however, asking for a mortgage broker for help is not the way to go. Maybe they might get lucky and pair you with the right person; however, when you work with a mortgage broker, they don’t have any authority over the person who is actually giving you your mortgage. In this fashion, if something goes wrong with the transaction, then the broker is simply going to wash his hands of the process and say that there is nothing he can do. The lender can do the same thing, leaving you hanging. A local lender is not going to do this because he/she is accountable to you.
3. Working with an Inexperienced Loan Officer
Another common mistake that potential homebuyers make is that they work with a rookie loan officer. If you are working with an inexperienced loan officer, then you are going to be paired with someone who does not know the local area. An inexperienced loan officer is also highly unlikely to know the guidelines of the company. Therefore, an inexperienced loan officer is going to have trouble navigating the common roadblocks involved with applying for a mortgage. It is important to work with an experienced lender.
4. Relying on a Corporate Firm
While there is nothing wrong with shopping around and looking at what bigger banks have to offer, they are highly unlikely to know the intricacies of your market. Real estate is a local business and markets vary widely from place to place. A large corporation is not going to be able to provide you with the insight you need to make a good decision when you are looking for a new home. For this reason, it is a good idea to rely on an experienced, local lender.
5. Starting the Process Late
Even though the most exciting part of buying a new home is looking at the options, you need to start the process of finding a lender as early as possible. If you can get pre-approved for a mortgage, this is going to make you more competitive when you place an offer on your dream home. A local lender can guide you through this process every step of the way, placing you in a position to succeed.
6. Focusing Solely on the Interest Rate
Yes, the interest rate on your potential loan is important; however, this is not the only factor that is involved when you are looking for a loan. Do not be driven by interest rates and, instead, focus on the right house for your needs. If you take the time to work with a local lender who can help you find the right house, the loan process will take care of itself.
7. Not Asking for References
Finally, when you are looking for a mortgage lender, you are investing in a service. Your lender should be able to take care of you as you navigate the homebuying process. Therefore, always ask for a list of references. If a lender is eager for your business, then he or she should have no trouble pulling up a list of references that you can speak with in the local area.
Take Your Time When Looking for the Best Mortgage Lenders
Buying a house is a big decision and you should take the time to get this right. When you work with the best mortgage lenders in the local area, you are investing not only in your house but your future as well.
