One of the scariest aspects of buying a new home is dealing with the financing. However, with some financing tips to use as a guideline, it does not have to be. One of the best tips is to know what you qualify for before you even begin shopping for a new house. With this number, you are not wasting your time looking for houses outside your approval range. You can determine this by using any online mortgage calculator or meeting with a reputable lender.
Then, it is important to understand mortgage brokers. These “companies” sell mortgages for a number of various lenders and banks. Typically, the broker would receive a commission that is based on a percentage of the loan or it could be a flat fee, which the lender pays. For securing a loan quickly, brokers can be invaluable. The reason is that they are able to represent not just one lender but multiple lenders, finding you the best deal. In fact, the APR with a broker can be less than if you were to go directly to the same lending institution since the broker does not charge as much for the loan closing.
Other benefits of financing with a broker include locking into the APR with what is known as a “sliding lock”. In this case, if interest rates were to decline, your broker would be able to get out of the lock and then restart another lock for the lower rate. Keep in mind that not all lending institutions and banks allow this but many do. While there are many excellent benefits from a financial perspective in using a broker, remember that paperwork is usually couriered at your expense, which can cost $100 to $200, and sometimes, more.
You also want to take time to shop around for the best mortgage loan. Too often, people will look at one or two options when there could be many other better possibilities. Do your homework, talk to a number of lenders and banks, take time to compare interest rates and costs, and learn how to negotiate. All of these simple steps will ultimately save you significant money and worth the time.