When you're in the market for a new home, you're also in the market for a new mortgage. That means you're shopping for two big purchases at once! Both purchases will be important decisions that can impact your financial picture and your satisfaction with the purchase longer term. We sat down with our mortgage lending expert and Five-Star mortgage lender Kelly Lambrecht to share 5 tips for making this decision a little less stressful.
1. Reach out early.
Whether you're buying a home for the first time, upsizing, or downsizing, you should get in contact with your lender as soon as possible. The more time you can put between searching for a mortgage and searching for the perfect home, the better, because it will give you more time to focus on these two very important purchases. Additionally, having a discussion with your lender first can make your offer more attractive to the seller of the home you want. In reaching out early, your mortgage lender can also identify special grants and other programs for which you might be eligible, or give you advice on what to do if you're also considering changing jobs or looking to improve your credit score to get the best rate possible.
2. Choose a mortgage partner that you trust and respect.
Ask your friends, relatives and other people you trust for recommendations on which lender to work with. In knowing that they were pleased with the experience, you can feel more confident about the process. Think of your mortgage purchase as an investment in the company you choose - by making that investment, what are they in turn doing that's good for you, your family and the community at large? Lastly, be sure to ask who will be servicing your mortgage loan after closing. Will the lender locally service your mortgage after closing, or will they sell it off to another company? If your loan is locally serviced, this will allow you to call and speak to your original mortgage lender should any questions arise after closing.
3. Determine how you want to work with your lender.
There are more options than ever for securing a home mortgage. You can do this completely online with zero in-person interactions, or with the help of a lender. There are few lenders in Wisconsin (PS, we are one of them!) where you actually don't need to choose: You can enjoy the convenience of working completely online, with the option of calling or stopping in to visit in person. In having the choice, you'll have someone to call if things don't go exactly as planned, either with the seller, the home itself, or some other unexpected change in the process.
4. Don't shop on rate alone.
Visiting the rates page of a lender won't always tell the whole story. Be sure you’re comparing apples to apples. For example, one lender may post a low interest rate, but may be charging up front discount points or additional fees to get that rate. While the interest rate looks attractive, this may not be the best financial option for you depending on your particular situation. To best compare one lender with another, obtain a “Loan Estimate” and compare the “Annual Percentage Rate.” The “Annual Percentage Rate” can be defined as your costs over the loan term expressed as a rate. While comparing the “Annual Percentage Rate” is helpful, be sure to share and discuss your future housing plans with your lender to help determine the best mortgage options for you.
5. Get at least two quotes.
Using all the great info in tip 4, make sure you ask these questions of at least two lending institutions. Getting a quote can also provide insight into the customer service you'll receive for the life of your loan. You'll quickly gauge response time, the expertise of the lender, and the overall flexibility that the lending institution can provide.