Getting a Loan and Choosing a Lender
When you’re searching for a new home, shopping mortgage lenders may feel like a huge chore.
But, like buying a car or choosing an insurance policy, taking time to compare your options can
save you heartache as well as money. The following tips can help potential homebuyers
navigate the competitive mortgage market.
Know your own financial situation.
Before you begin the home loan application process, determine what you can realistically
afford. Take into consideration your credit score, how much debt you currently carry and what
type of down payment you are prepared to make.
Have your documents ready.
While each bank may require different documentation, you may be required to furnish the
following information depending on your employment and financial situation:
Review the basics.
- Pay stubs;
- Tax returns;
- Financial statements (one that is less than 60 days old);
- Copies of additional monthly payments such as car loans, credit cards, and student
- Any other information (such as proof of additional income) that you think will help your
banker to positively evaluate your credit request.
Knowing the fundamentals of the home loan process is an excellent way to prepare to choose
the right mortgage. Make sure you are familiar with interest rates, loan terms and additional
fees associated with buying a home.
Beyond the interest rates, there are closing fees and points and commissions. You will want to
compare these for all the lenders on your list. There are several calculators available online
that will help you determine which loan provides the best value, including these offered by
American Bankers Association.
Choose a trusted lender.
Get references from family and friends and do your research. Contact your local Better
Business Bureau to find out if there are any outstanding complaints about any of the lenders
you are considering. Keep in mind, federally insured banks are required to operate under a high
level of regulatory supervision. A fully regulated bank may be your best choice. To find a fully
regulated bank in your area, use the FDIC’s BankFind webpage at research.fdic.gov/bankfind.
Read between the lines.
Slick TV ads, telemarketers or door-to-door salespeople will often offer fast, easy loans for
houses, cars and home repair, but not disclose all of the details. Read the fine print. If it sounds
too good to be true, it probably is.
When in doubt, ask for clarification from your lender. Discuss how long the loan process will
take, how you will communicate – by phone or email, and who will service your loan.