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How Do I Decide Who To Get A Mortgage From?

If you want to know who to get a mortgage from, you will need to be thorough as well as methodical.

I suggest that you contact at least 5 or 6 lenders initially. Get their information. Find out everything you can about each of the lenders. ”Build” informational folders on each on them so that you have the important information about each in one, central place.

Fill out their informational forms online and provide your real contact information on the forms.

Talk to their sales representatives when they contact you.

If time is important, contact them first but fill out the online information forms before you do.  Doing so should reduce the amount of information that they ask you for if the lender is “with it.”

By the way, “Branch Managers” and especially “Loan Officers” are really sales people in disguise.  So, regardless of what they tell you about putting your interest first, always assume that they will be putting their interest first.

Talk to your friends and family members that have mortgages.  Ask them what happened to them and why they did or didn’t like who they got their mortgage from.  Their experience can be worth many thousands of dollars to you!

Be prepared!  Do your due diligence when selecting a lender and you probably will find that leaning how to get a home loan the right way is worth thousands of dollars to you.

Things that most people use to decide which lender to borrow their money from include, but are not limited to:

  • Immediately eliminate any lender that you didn’t like dealing with that you have talked to as we recommended above in the section on “How Do I Get A Home Loan?”.  If you don’t like the people that you will be dealing with or dislike their business culture now, it’s probably going to get worse as time passes.
  • If a salesman lied to you immediately eliminate the salesman and possibly the lender from consideration.

But, don’t be afraid to contact that or any company and ask more questions about their business or ask about the information that you were lied to about and, if appropriate, let their management know that they have a salesman that is misleading potential customers.

Most lenders are almost quite exact about keeping their word and coming through on their promises and do not want anyone misrepresenting the facts about their business and what they will or will not do.

  • The Interest Rate – Interest Rate is the amount you will be required to pay the lender for the use of the money.  It is quoted as a percentage.  The interest rate can vary a lot from one lender to another.  You will pay the interest with each payment you make on your loan.
  • The Loan Origination Fees – These are fees you will pay the lender for “writing” your mortgage loan.  There are other types of charges that may be lumped into this category. They can be very expensive but vary from lender to lender.
  • Term of the Loan – This is how long you will be making payments to pay off your mortgage loan.
  • Payment Processing Fees – These are fees that are charged by a lender or the lender’s mortgage servicing company (payment collector) for collecting and processing your mortgage payment.
  • Prepayment Options – Always be sure that your loan contract will permit you to pay off your home loan with no penalty or additional charges.
  • Overall Reputation – The reputation of the lender is actually quite important.  Lenders, just like other companies, have different attitudes, quality, business rules, etc.  These “intangibles” can be very important…  especially when you can’t make a payment.
  • Size of the Payments – There is a downside here… the smaller the payment, the longer it takes to pay off the loan.  Sometimes, lenders will give you lower initial payments and then require a jump in the payment size after a specified number of months.

You can also get an interest only loan from some lenders.  Whether they offer them at all varies from lender to lender.  Needless to say, you will never pay off your mortgage with an interest only loan.  But, the payments will be great!

The downside of an interest only loan is that you may end up effectively paying “rent” for the rest of your life because you will never pay off your mortgage note on your home.  So, unless you are in an area where housing prices are always going up, you will probably never be able to sell your house without taking a loss.

Another variation that you see occasionally is a quite significantly lower payment for say 10-years and then you will be required to make what is called a balloon payment of the remaining borrowed amount (the Principle Amount).

When the balloon payment comes due, you only have two non-default options. Either you refinance the remaining Principle Amount or pay off the entire remaining Principle Amount.  This last option is a very dangerous situation financially and has several very negative ramifications.

You will need to decide which of these things matter most to you.  I’ve put them in the order that I think is the proper order from most important to least important.

And, be sure to add things to the list that are important to you and put the list in YOUR order of importance. This is about you and your future, not us!

Be very careful when you chose who to get a mortgage from and I’m sure you will be very glad that you did what I suggest in this post.

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