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Buying a home in Los Angeles is both exciting and intimidating, but finding the right home lender makes everything easier.
Los Angeles is home to a variety of financial institutions. If the idea of sorting through each of them to find the right mortgage lender seems overwhelming, don’t worry. As long as you learn the basics about mortgages before starting the process, getting a suitable mortgage lender will be easier.
We consulted leading mortgage lenders Los Angeles bound, and compiled a list of useful tips for borrowers in the City of Angels. So, whether you are looking to buy a home in Silver Lake, tap the equity in your Echo Park townhouse, or refinance your Laurel Canyon bungalow, mortgage lenders are always a great place to start, and here’s how to choose the right one.
Look for Positive Reviews
It isn’t how close the bank’s location is to your home as you don’t need to go there to get a mortgage. It isn’t loyalty to the bank as you’re simply one of million accounts. It also isn’t the guaranteed mortgage interest rate or the cost to get the loan, aka loan points.
Remember, mortgage lenders are highly competitive. The key principle that will help you find the best lender is what kind of customer service they provide. Look for a mortgage lender that boasts the best customer reviews.
When comparing your options, take a closer look at the cost information included. When undergoing the process, ask every loan broker and officer for information regarding their present mortgage interest rates, regardless of whether the rates are negotiable or fixed. You should also ask about the loan’s APR (annual percentage rate).
If you select carefully thoughtful scrutinization of all prospective lenders, it will save you a lot of money.
Get Your Credit Score Where It Should be
Review your credit report to ensure the information added are accurate. If not, immediately contact the credit bureau and correct them accordingly. If everything looks accurate, identify your credit score.
To obtain your credit score, you can either contact the credit bureaus or your bank. Also, you can visit select websites and credit card companies to get your credit score for free. Your score will typically be between 300-850. Remember, the higher the score, the better the outcome. Your score should be at least 620 for any conventional loan. As for an FHA loan, you’ll need at least a solid 500.
If you want to increase the score, ignore companies that promise they will clean up your credit. Instead, below are a few examples of what it really takes:
- Try using 30% or less of your available credit
- Keep your older accounts open.
- Don’t forget to pay your bills on time
- Don’t take out new credit accounts
- If your credit report shows any error, contact your creditors and the credit bureaus
Understand Different Types of Lenders
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There are several different types of mortgage lenders on the market. Consider familiarizing yourself with each of them as they make a difference to your available options in terms of choosing a mortgage. Let’s check them out!
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Mortgage Brokers – Not necessarily a lender, a mortgage broker can help you find a proper lender. They are typically paid on commission by the lending institution or the borrower.
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Traditional Banks – These are depository institutions that extend mortgage loans. Mortgage terms and interest rates here will usually be identified entirely by the nature of the marketplace.
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Credit Unions – Generally, you need to be a member to obtain a loan from credit unions. However, if qualified, a credit union will offer better rates compared to traditional banks. If you’re certain that a mortgage is in your near future, getting a membership at your local credit union may be beneficial.
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Mutual Savings Banks or Savings and Loans – These are relatively small, locally-focused organizations. You shouldn’t count on them for bigger loans. However, their rates are fairly competitive as they are able to negotiate more directly with their clients.
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Mortgage Lenders – A mortgage lender is a dedicated mortgage firm. Unlike depository institutions, mortgage lenders don’t offer other lending or banking services, only mortgages. They usually process an application faster than a retail bank. Mortgage lenders come in different forms, e.g., correspondent lenders, hard-money lenders, and retail lenders, all of which are a form of dedicated mortgage lending service.
Compare Rates
Start by looking for the best mortgage rates online. Remember, the rate quote you find on the Internet is merely an estimate. A broker or lender can only provide a precise rate after pulling your credit information and processing a loan application. If you are satisfied with the product, feel free to lock-in.
Once you have a few quotes on hand, try comparing costs and identifying which one fits your needs the best. You also need to determine which one makes the most financial sense for you. Note that you can use your research as a means of negotiating for the most affordable mortgage rates possible.
There’s more to searching for a mortgage lender than simply choosing the lowest rate. But that isn’t to say you should put the rate aside. Remember, the total interest you’ll be paying over the course of the loan is a massive figure, and it turns out, a low rate can potentially save you thousands.
Wrapping Up
When it comes to choosing the right mortgage lender, it pays to shop around and consult at least three or four lenders to better understand the person, the interest rates, and what type of loan they can help you with.
Your agent will surely have a few of their own recommendations, but it is in your best interest to do some personal digging. You can also ask friends and family for references.