Top ways to get the best mortgage deal
You want to buy a new home. Let the mortgage shopping begin.
Shopping for a home loan or mortgage will help you get the best financing for your new home. A good place to start may be with online reviews of lenders based on their responsiveness, knowledge, helpfulness and follow-through gleaned from consumers themselves.
Real estate financing is available from many sources, and choosing the right lender is just as important as choosing your home. There are big banks, local banks, credit unions, mortgage brokers and online lenders. Shopping, comparing and negotiating could save you thousands of dollars. Your association with a lender is a relationship, and you want to make sure you're working with someone you trust, said Mark Nunez, real estate loan officer for Consumers Credit Union based in Lake County with service centers in Lake County and Northwest Cook County.
Where you go for a loan depends on what is comfortable for you and where you can get the best deal. Do you want to shake hands with your loan officer or are you OK with an online mortgage. You can talk with several lenders and get quotes from each of them or you can choose to work with a mortgage broker that represents several lenders and will do the comparison for you. Some online sites will also do the comparisons.
If you want to comparison shop yourself, it's not an easy task, as one lender may have a lower rate but higher fees. Therefore, you must consider interest rates, terms, points and costs such as loan origination fees, title search, title insurance, appraisal fee and other factors that apply to your situation. Then determine what is best for you.
Lenders are required by federal law to disclose most loan costs to the borrower on what's known as a Lenders Estimate (LE). This standard form shows the estimated loan costs and explains what could change at closing.
Don't be afraid to ask your lender for a lower interest rate, fewer points or to waive or reduce fees, but make sure the lender doesn't agree to lower one fee while increasing another. You can ask lenders for better terms than the original terms quoted or to compete with terms you found through another source.
Mortgage rates change continually, like prices for stocks, bonds and other financial assets. A rate quote from Lender A that you get Monday can't reliably be compared with a quote from Lender B on Thursday. Get your quotes quickly so that you're making valid comparisons. But remember, a mortgage is a product, just like a car, so the price and terms may be negotiable.
These are negotiable items:
• Interest rate
• Lender fees - including origination, processing, underwriting and courier fees
• Title insurance
• Escrow charges
These are non-negotiable items:
• Transfer taxes
• Government recording fee
• Appraisal fee
• Charge for credit report
Lock-in rate
After you have negotiated the best deal, you should get a written lock-in rate from the lender. Make sure it includes:
• The interest rate
• The lock-in period.
• Points to be paid
Ask whether there is a fee for locking in your rate. In some cases, this fee may be refundable at closing. A lock-in protects you from rate increases while your loan is being processed.
Many lenders now offer loans that require less than 20 percent down, but they may want you to buy private mortgage insurance to protect the lender from a homebuyers that fail to pay.
With low interest rates, home ownership is attainable for more people than in the past. The bottom line is to get preapproved from a lender before you go house hunting.
This article is sponsored by Consumers Credit Union.
For more information, contact Mark Nunez, Real Estate Loan Officer, at (847) 672-3416 (office) or (815) 687-2036 (cell).