Buying a new home or refinancing your existing mortgage is an exciting time; however, it's also a big decision. For this reason, you need to make sure that you take the time to get it 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
Numerous websites advertise loans online. They even advertise how easy it is to find and close a mortgage and may even post a litany of positive reviews. However, these online mortgage lenders most often don't have someone available if something goes wrong in the process and make 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 of your home buying 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, there is nothing wrong with asking. However, asking a mortgage broker for assistance is not the way to go. Maybe they might get lucky and pair you with the right person, maybe not. A mortgage broker serves as the go-between for the borrower and the lender. Mortgage brokers are not lenders; they simply match you with a lender and a program. Typically, mortgage brokers don't control the person assigned to your mortgage. If something goes wrong with the transaction, the broker can easily wash their hands and turn away from the process, leaving you hanging. A local lender is not going to do this because he or she is accountable to you. A local lender is committed to evaluating different options and mortgage programs that work best for you. A local lender wants to develop a long-term relationship.
3. Working with an Inexperienced Loan Officer
Another common mistake that potential homebuyers make is working with a rookie loan officer, especially one from a larger institution. An inexperienced loan officer may not know the local area. It is unlikely that they'll know the company's guidelines or the ins and outs of the loan process. Therefore, an inexperienced loan officer may have trouble navigating the common roadblocks involved with applying for a mortgage. It is important to work with an experienced lender that knows the area.
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 real estate markets vary widely from place to place. A large corporation may not provide you with the insight you need to make a good decision when looking for a new home or refinancing. 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 or prequalified for a mortgage, this will 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, putting you in a position to succeed.
6. Focusing Solely on the Interest Rate
Yes, your potential loan's interest rate is important; however, this is not the only factor involved when you are looking for a loan. Do not be driven by interest rate alone; first, focus on the lender you find easy to work with and trust—someone who is looking out for your needs and will assist you step-by-step. If you take the time to work with a local lender, 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 home buying process. Therefore, always ask for a list of references. If a lender is eager for your business, then they should have no trouble pulling up a list of references that you can speak to within the local area.
Take Your Time When Looking for the Best Mortgage Lenders
Whether you're buying a house or refinancing your existing mortgage, it's 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.
