How to Choose a Bank for a Home Loan
When looking to purchase a mortgage, a borrower has to make a major decision based upon numerous variables. First, he must decide which type of mortgage to purchase. Then, he must decide which lender to use and why. Some borrowers simply want to choose the cheapest lenders, while others prefer more hands-on lenders. The process to choose a bank for your home loan should be individualized to meet your specific needs.
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Instructions
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Ask friends and relatives who currently own mortgages for recommendations on a bank for your mortgage. Some may have very strong opinions based on past experiences.
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Consider using your current bank for your lender. If a banking relationship already exists, certain fees may be waived.
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3
Compile a list of three lenders and ask each for a quote on a mortgage. Request a copy of the Good Faith Estimate and Truth in Lending Statement from each one.
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Compare each document. The mortgage with the lowest APR (annual percentage rate) as listed on the Truth in Lending statement is the cheapest overall mortgage. The APR is the numerical representation of the total cost of the mortgage for one full year, including the closing costs as well as the monthly interest rate.
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Select the mortgage with the lowest APR. Consider the bank and loan officer attached to this mortgage. If you are not comfortable with this lender, or simply prefer another one, ask the preferred lender to meet or beat the quote from the other lender in order to win your business.
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Tips & Warnings
Consider your reaction to the lender and their customer service on your first transaction with them. This is a likely representation of the way you will interact for the rest of the process, which can last from three to six weeks. It may be worth it to pay a little extra for a lender who treats you with respect than one who rushes you out the door.
Fees associated with a mortgage can change throughout the process if the situation changes. Keep a copy of your original Good Faith Estimate and Truth in Lending Statement to ensure that your final fees are the same as your original fees.
References
- Photo Credit businessman with money in his pocket image by Wolfgang Kraus from Fotolia.com
