So you are ready to buy a house in the Greater Indianapolis area and you are looking for the right mortgage lender to help you with a home loan? This article will help you understand your options and to help you find the best mortgage lending company for your needs.
The residential mortgage lending industry is very crowded with a few different types of companies to choose from. So where does one get started. First, understand that there a number of different types of mortgage lenders:
1)Mortgage Brokers: Companies that do not lend mortgages at all but instead help you choose from a list of several lenders that the brokers work with. They then assign your loan to one of those lenders and then act as a “middle man” between you and that lender up until the loan is closed.
2)Credit Unions and Banks: Offers Mortgage Loans in additional to their traditional banking products such as savings and checking accounts
3)Mortgage Bankers: Bankers who specializes only is home mortgage loans and not other financial products such as savings and checking accounts
As with any decision related to purchasing a home the best thing to do is to ask your real estate agent for some guidance. He or she has a lot of experience with many different lenders and will have valuable information about who you may or may not want to choose.
After you decide which lenders you would like to call, contact the lender(s) and ask questions.
Here Are Some Good Questions to Ask Your Mortgage Lender
– How do you prefer to communicate with clients — email, text, phone calls or in person? How quickly do you respond to messages?
– How long are your turnaround times on pre-approvals and closings?
– What lender fees will I be responsible for at closing? (Fees may include commission, loan origination, points, appraisal, credit report, and application fees.)
– What are the down payment requirements?
– What is the current interest rate for my loan and will their be an additional mortgage insurance premium added to my payment
Pros and Cons: Bank / Credit Union vs Mortgage Banker
I mentioned above 3 types of mortgage lending institutions. With all the options out there, it is important to find the best mortgage lending company for you. So what are the pros and cons using your own bank/credit union vs a mortgage banker that specializes in mortgages? Below is my comparison between a couple of your options:
Using your own bank or credit union:
– They might be able to give you a better interest rate.
– Many have a bad reputation for missing closing dates and moving slowly.
– Some have a bad reputation for pre-approving borrowers then later declining them. This is partially due to having loan officers with less experience.
– They tend to be less flexible when it comes to payment and loan processing options.
– Because big banks often move slowly, they many require you to order the property appraisal immediately instead of waiting until you are done with the inspection negotiation. This puts you at more risk of losing money and in a weaker negotiating position if major repairs are needed to the home.
Using a Reputable Mortgage Lending Company that specializes in only mortgages:
– Reputation of closing on time gives you a competitive advantage when competing with offers from other buyers.
– Less stress based on a higher likelihood of closing on time.
– You may be given a higher interest rate on the mortgage loan if you don’t compare them with some other lenders.
The best practice for finding a mortgage loan is to apply and get a loan estimate from both your current bank AND a reputable mortgage banker to compare loan terms and interest rates. If your current bank offers a better rate, then we can use that to negotiate with the smaller lender so that you can have the best opportunity to have a great real estate transaction.
This article is far from including ALL the information you need to make this important decision. If you would like to chat further about your options feel free to give me a call! My direct cell phone number is 317-201-1710.