What to Look for When Reviewing Lenders: When you are house hunting, you don’t need to just take what is given to you. It’s often forgotten that you can review your options when it comes to lenders, as much as they are reviewing you.
In fact, it’s important that you don’t go with the first thing you’re offered. Not unless you’re sure it’s the best offer available. But how do you go about looking for the best lender? We break it down here. Read on for all the details.
Shop around
Looking for the right lender takes a lot of window shopping. There are a lot of options of where you can get a mortgage from, including your bank, a local credit union, online lenders and more. Take a look at all of them to see what is best for you.
You might want to take notes as you go. Ask each of these what their rates are, what loan terms they can offer, what down payment requirements they have, any closing costs and extra fees.
Compare what you’ve found to determine what is best for you. For a very good starting point, you can compare the best personal loans here.
Strengthen your credibility
In the meantime, you can prepare for the talks that lenders are going to have with you about your mortgage. They’re going to ask about three main things: your income, your debt, and your credit.
If you have multiple sources of income, including social security, child support, alimony or income from a side business or part time job, bring proof.
The second thing your lender will look at is your debt-to-income ratio, and how much of your money is going to your minimum monthly repayments. They’d rather your mortgage was your only loan, so it’s helpful to wipe your debt out entirely. You can look at taking out an auto loan to wipe it or balance transfer card to help bring it down faster.
Finally, take a look at your credit score. You can use the time you have shopping around to help improve that. If you have no credit history, get a card, and keep up with repayments. If you have a bad credit history, look into a credit builder card to help you up that score.
Negotiate
Yes, this is in fact an option. All the work you’ve done researching lenders can be used as a bargaining tool. You can then present these options to a lender that maybe isn’t offering you the best rates, but for the security of sticking with a company you trust or some other reason, you want to stick with them and see if that causes them to bring their rates down.
What might also help is you bringing everything you have. You have strong credit, you have no debt, you have a 20% down payment, you have multiple forms of income. If any of these apply to you, bring proof, and watch as your borrowing power expands.
If your chosen lender isn’t interested in what other lenders are proposing, you can then simply go with the lender that is offering you the best deal.