As decisions go, choosing a mortgage lender is a pretty important one, and could potentially have a significant impact on your bank account. In the age of consumer choice, there’s more to securing the best possible home loan than hunting down the lowest available interest rate, although it does help. Whether you’re borrowing for the first time or refinancing for a lower rate, taking a few extra steps in the process could save you a bad headache further down the road.
Consider your situation
In order to choose the most appropriate lender for you, you’ll first need to understand your own requirements when it comes to your home loan. Start by determining what type of loan you want to take on, which will depend on details like your current income, expenses, and credit rating. This will also help you determine the best loan term for you, based on how much you can afford to put towards a monthly mortgage repayment.
Do your research
When you’re chasing the best possible offer from a lender, it can’t hurt to be informed. Getting familiar with the property market will give you a leg-up before you enter negotiations, but you should also get to know what kind of offers are available from each lender in the market. Not only will it give you a great starting point, but it will also arm you with the bargaining power to negotiate the best possible deal with your chosen lender. One of the most important things you can do is compare rates, but being aware of other details like closing costs and fees could save you a fair amount of money.
Hike up your credit score
This is where you can really maximise your chances of coming away from a negotiation with a victory. You might be looking for finance, but your lender is also looking for a safe bet, and a strong credit score can make you a very attractive prospect. The fastest way to make your score shine is to pay off any credit card debts and keep your balances low, but this isn’t the only thing to watch out for. You should also make sure your bills are paid on time and aim to catch up on any missed payments as quickly as possible.
Get pre-approved for your mortgage
This is where an outstanding credit score comes in handy. When a lender investigates your credit history, they can ascertain whether or not they would be happy to finance your mortgage, and if the verdict is positive, your bargaining power increases dramatically. Every customer is a risk, and every bank wants to lend money to customers they consider to be good risks. Pre-approval will put you at the top of the pile, and give you the opportunity to push for a better deal.
Read the fine print
Like any other business dealing, an agreement with a mortgage lender will always come with a handful of pesky terms and conditions. Avoid nasty unexpected expenses or fees by reading everything carefully and confirming your understanding with the lender before you sign on the dotted line, and ask plenty of questions. Get their advice on the best type of home loan for you, interest rates, hidden costs, discount points, and anything else that comes to mind before making any hard and fast decisions.
If you have a solid grasp on mortgage rate trends, you always have the opportunity to take advantage of a lower rate by refinancing your home. It’s a good idea to start by working out how much equity you currently have in your home, which isn’t as tricky as it sounds, thanks to handy online calculators. Refinancing may not be the right option for each individual case, but if you’ve been saddled with a momentarily high-interest rate, it’s worth keeping an eye on the market.
Don’t get too caught up in calculations and numerical comparison – customer service might just sit amongst the most important criteria against which to measure your prospective lender. In an ideal world, your relationship with your mortgage lender would offer you support and options should unexpected financial circumstances arise, and given the huge range of banks to choose from, this isn’t an unreasonable expectation. Once you choose a lender, you have effectively entered into a long-term relationship. Making it work for both parties will require plenty of sacrifices on your end, so make sure you’re getting what you need in return.