5 Tips for Finding the Best Mortgage Lender

The market is flooded with mortgage lenders, but when buying a home, who should you choose? Too often, borrowers rush through the lender shopping experience and settle for less. We get it—with so many lenders, it's hard to know which fits your financial situation and long-term goals. Below, we'll discuss some key factors to consider when selecting a mortgage lender to ensure you make an informed decision that aligns with your goals and needs.

Start with Lender Options & Rates

Mortgage lenders offer different interest rates depending on your financial situation and repayment ability. While a fraction of a percentage point may seem negligible, high costs (or savings!) will add up over time.

For example, a one percent interest-rate difference on a $250,000 loan with a 30-year fixed-rate mortgage could mean paying an extra $58,813 in interest payments throughout the loan. That's a lot of money! But unfortunately, nearly 50 percent of home buyers do not shop around when selecting mortgage lenders.

Shop Big, Small, & Online

As we said, the market is crowded, so you have more choices. Use overcrowding to your advantage, and don't just shop online. Thousands of large and small banks, credit unions, and online lenders are out there. Just be patient and do your research. You have a lot to gain—and lose.

Here are three of the most common lenders:

• You can use them to purchase either a primary residence, a secondary home, or an investment property
• Borrowing costs tend to be lower overall compared to other mortgages
• Sellers can contribute to closing costs

Some of the downsides include:

• Local Banks: Believe it or not, many small community banks offer the same loan options as national brands. The difference is local banks offer a much more personal experience. Plus, they have more flexible lending criteria. The downside? They generally have fewer loan options or robust online resources.
• Big Banks: National banks have more options, credibility, and industry-standard rates. However, they may lack the personal touch you’re looking for, especially if you’re a first-time buyer.
• Online Lenders: Online lenders offer convenience and lower rates because they do not have to shoulder the overhead of brick-and-mortar institutions. The downside, however, is that they lack in-person support services.

Ask for Recommendations

It may be tempting to begin your search online, but we recommend requesting referrals from someone you trust. Consider asking a friend, family member, or colleague about their experience with a lender. Look for a collaborative, attentive, communicative, and patient lender. If someone you know had a positive experience with a particular lender, there's a good chance you will too.

Never Stop at the Headline

In the media world, headlines generally give readers a sense of what the entire article is about. But headlines only give you a portion of the picture. The same goes for mortgage lending headlines. Many lenders advertise attractive interest rates; unfortunately, you may not be eligible. Interest rates and loan terms vary, depending on your credit score and finances. So do your due diligence. Never stop at the headline.

Shop Around: Negotiate Your Interest Rate

Many borrowers are surprised to learn that they have the power to negotiate interest rates. To get the best rate possible, start shopping. Create a list comparing rates and include online quotes and closing fees from other lenders. Then, when you meet with your prospective lender, pull out your list of quotes and use them as leverage to negotiate a better rate.

You may not always get what you want—then again, you may!

Ready to Look at Homes?

When you want to buy a home in San Diego, connect with a top-rated team of realtors who listen, are readily available, and will work tirelessly for you. Contact The Selby Team to get started today!