Contrary to the belief that securing financing is simply about credit scores and income levels, it’s certainly not. With somewhat tougher lending and credit guidelines, it’s now even more important to find a lender who is honest, forthright and will work in your best interest.
Fortunately, with the dropping interest rates, there may never be a better time to secure financing, despite tougher regulations.
When building there is most often times the need for a construction loan while the home is built. After the home is finished, you must pay off the construction loan and refinance the loan into a conventional mortgage loan.
Construction loans are often easiest to secure through a local credit union or a local bank. Local bankers are much more comfortable offering home constructions loans in their area because they understand the local market. However, borrowers of construction loans may have to provide more information to prove they can afford the project. You often can’t apply for a construction loan until you provide building plans, a construction contract and an estimated cost.
See our best advice below for how to find the right lender for you, no matter what type of home loan you need!
Shop around: It can’t be emphasized enough that you should shop around when it comes to finding a lender. Compare rates and terms of mortgages until you find the best deal, and don’t forget to factor in hidden expenses such as closing costs.
Credit unions: Check out your local credit union. As mentioned, they are more apt to work with borrowers in their communities. Credit unions are typically known to offer lower mortgage interest rates and low to no fees. They also offer personalized service and may be able to close on your loan quicker.
Mortgage brokers: Consider a mortgage broker. They act as a middleman and shop around for the best rates with different lenders. A broker’s goal is to match you with the loan product that best meets your needs and is the lowest price. A mortgage broker should be motivated and be willing to put in the hard work necessary to get you the best loan possible, while also working with the appraiser, title company and insurance company to make sure the process goes smoothly. Mortgage brokers may or may not be state regulated. Check with the National Association of Mortgage Brokers or the Better Business Bureau to find out if a broker is in good professional standing. When working with a broker, understand the loan process and typical fees, and ask questions if you don’t understand. After your loan is approved, you will work directly with the mortgage service provider.
Word of mouth: With so many options out there, it can be difficult to sort out who may be the best to work with. Word of mouth is the oldest form of advertising, and usually the best. Talk to your friends and family about what lenders they used when they purchased their home. Ask them what they did or did not like about their particular lender during the process.
Be careful online: There are plenty of deals online, but not all deals come through a reliable broker or lender. Know who you are dealing with.
Additional Tip! Lock it in: A low mortgage rate is just a quote until it’s locked in. Mortgage rates can change as often as several times daily. If you want to guarantee you’ll get the rate you’re quoted, ask your lender or broker to lock it in.
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