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Choosing The Top Mortgage Lenders For You

After you have investigated the different lenders (see the articles available on the “The Basics” menu option), it is time to choose the top mortgage lenders for you to get your mortgage from.  Here are the steps that we suggest:

  1. Figure how long you expect to occupy your new home.  This is a really important question because your payment size and your interest rate will be determined, at least in part, by the length of your loan and the type of loan that you apply for.
  2. Determine what type of loan you wish to get. Remember that an ARM (Adjustable Rate Mortgage) will periodically change interest rates which will also affect your payments and the amount of interest that you pay. Fixed rate mortgages usually have higher interest rates and consequently higher payments but your payment will never change from a principal and interest standpoint.
  3. Determine the length of the loan that you wish to obtain.
  4. Here are some suggestions based upon the first three items above that you might want to think about:

    How Long

    Loans To Consider

    Advantages/Disadvantages

    1 to 3 years

    1, 3 or 5 Year ARM

    – Very Fast Equity Growth – You Own Your Home Quickly – Very Large Payments– Depending Upon The Mortgage Terms – Your Payment May Increase Dramatically, Periodically– Very Hard To Qualify For Your Mortgage Loan

    4 to 7 years

    5 or 7 Year ARM

    – Fast Equity Growth– You Own Your Home Fairly Quickly  – Large Payments- Depending Upon The Mortgage Terms– Your Payment May Increase Dramatically, Periodically– Harder To Qualify For Your Mortgage Loan

    5 or 7 Year ARM w/Balloon

    – Fast Equity Growth – You Own Your Home Fairly Quickly – Large Payments– You Must Refinance, Sell Or Pay Off Mortgage At End– Depending Upon The Mortgage Terms– Your Payment May Increase Dramatically, Periodically– Harder To Qualify For Your Mortgage Loan

    7 to 10 Years

    10 Year ARM

    – Not As Large Payments As Those Of Shorter Term Mortgage Loans – Intermediate-Rate Equity Growth– You Own Your Home Sooner Than In Most Situations– Not Quite As Hard To Qualify For Your Mortgage Loan – Payment Size Will Be Close To Double That Of A Corresponding 30-year Mortgage – Depending Upon The Mortgage Terms– Your Payment May Increase Dramatically, Periodically

    More Than 10 Years

    15, 20, 25, 30-Year Or Longer Fixed Rate Mortgages

    – Payments Become Progressively Lower As The Term Increases – Payments Will Never Change Because Of The Principle And Interest Portion Of The Payment– Not Quite As Hard To Qualify For Your Mortgage Loan Total Interest Paid Becomes Greater And Greater As The Term Increases -It Takes Significantly Longer To Own Your Home– If You Are Older, You May Never Pay Off Your Mortgage

    Here are some other things that we believe that you will want to consider when deciding what kind of mortgage loan you want to apply for:

    • How fast do you want to build up equity in your home?
    • What is the maximum payment amount that you can reasonably afford?
    • How tolerant are you of changes in the size of your payment?
    • Where do you believe that interest rates are going in the future?
    • Are your property taxes going to change during the term of your loan?
  5. Get any information related to the business rules that the lenders use when dealing with mortgages, if you have not already done so. Determine if there are any “Show Stoppers” in the business rules.  If there are, and you really like the lender, talk to the lender’s mortgage loan officer about it, especially if you think that you want to obtain your mortgage loan from that lender.Sometimes lenders will make exceptions to their business rules if they really want to “do the deal.”
  6. Work with each lender, your insurance agent and your real estate agent, as appropriate, to determine how much you will need to pay into escrow for property insurance, unpaid assessments and taxes at the time of closing.
  7. Plus, when you do that, work with each lender, your insurance agent and your real estate agent, as appropriate, to determine how much you will need to pay into escrow for property insurance, unpaid assessments and taxes with each monthly payment.
  8. Use the following spreadsheet to help you figure out which lender that you wish to borrow from. Feel free to download the spread sheet to your computer if you wish or to share it with friends.  We suggest copying it to your clipboard and pasting it into the appropriate document on your computer.
  9. [Click here to open Spread Sheet in another window]

  10. Review the spreadsheet and decide which two or three lenders you wish to pursue further.
  11. Contact the lenders you selected and attempt to negotiate better terms based upon the results of the review.  Be sure to contact the lenders in reverse order of desirability because it will weaken/damage your position with the lenders if you keep coming back to them.  Unless not allowed by something that you signed, share what other lenders are offering with each of the final lenders and your reasoning, as appropriate.
  12.  Make a final decision and notify the lenders. Again, contact them in reverse order of desirability … because you may get the lower two lenders offering better terms when they realize they are going to lose the loan.

Good Luck and we truly hope that you are able to choose the top mortgage lenders for you.