What You Need to Consider Before Working with a Lender
Closing Costs and Fees
Your Phoenix Area lender should also disclose all of the costs, fees, points, and payments associated with your loan. Each lender will calculate his or her commission differently. Many of the costs that your lender might quote you will cover things like property taxes, escrow fees, credit report costs, and more. Know these costs up front and make sure you compare these costs among the lenders you are considering.
Interest rates are very important factor when choosing the right mortgage lender. Your interest rates play a key role in determining how much you pay each month and in determining how much you will pay back over the life of the loan. Shop around for banks, credit card unions, and online lenders to see who can offer you the best interest rate. NOTE: Interest Rates are highly dependent on your credit history and current debt. Please see my CREDITSCORE to find out how you can take action to correct and improve your credit worthiness.
Good Faith Estimate
Your lender should be able to provide you with what's known as a good faith estimate. While GFEs, aren't necessarily written in stone, lenders often honor their good faith estimates in order to protect their reputation in the business. You'll get this GFE within three days of applying for your home mortgage loan. You might also discuss an interest rate lock based on how the market rates are trending.
If you have a special situation- you are a veteran, disabled, a low income buyer or a first time home buyer- you may need to do additional research to find the best interest rates. Don't forget government-backed lenders such as Fannie Mae, HUD, or VA loans if you qualify. Please see my FHA page to learn more about what a FHA loan is and how you can find one.
Types of Loans/Financing Available
Most lenders offer conventional 15 and 30 year fixed rate mortgages. However, if you are interested in alternative financing methods such as adjustable rate mortgages (ARMS), balloon mortgages, hybrid mortgages or interest only loans, you will need to find a lender that services these types of loans. I work with a hand full of private money investors who can provide you with a bridge loan or short term loans.
There are a number of different considerations when determining the right mortgage lender for your mortgage. The most important factors include:
While not the most important factor, it can be a wise idea to go with a bank or lending institution that has a reputation for longevity. A lender who has been in the business for a long time is likely to be reputable and not to charge outrageous or unfair fees. Furthermore, a lender who has been in the business for a long time is more likely to stay in the business. If your mortgage lender does go out of business, your loan can be sold to a new company. While the new lender can't change the terms of your loan, the transition period from one servicer to another can be confusing and there is a risk of late payments or improperly forwarded mail that will create paperwork and hassle for you.
Questions to Ask Potential Lenders