Buying a home can be a big step into the next chapter of your life. However, it’s pretty unlikely that you have the money to buy a house all at once. So, you’ll need a home loan or a mortgage that you can pay off steadily. The problem is that there can be so many mortgage loan partners to choose from. How can you find the right one for you? Here are 6 tips on how to pick the right home loan partner.
Tips for finding a home loan partner
1. Check your credit score.
First, check your credit score to find out what kind of loan you can afford. Your credit score can affect a lot when buying a home, including your mortgage interest rates and your insurance score. So, get a free credit report from one of the three national credit reporting bureaus (Experian, Equifax, or TransUnion). Make sure everything is accurate on your report. If something looks wrong, work with the financial institution the debt is registered with to solve the issue.
If everything looks accurate and you don’t have the greatest credit score, work on increasing your score first by:
- Paying off as much of your existing debt as possible
- Paying your bills on time
- Setting up automatic payments
- Avoid using credit cards while and after you pay them off
2. Know your mortgage terms.
Sometimes, delving into the world of home loans can be full of confusing technical terms. So, it helps to know a bit of lingo beforehand to follow along and get the kind of loan you need. Some of the most basic terms you’ll need to know are:
- APR (Annual Percentage Rate): The TOTAL amount of interest that will be paid back to the loaner. This does NOT the same as your interest rate for each year.
- Closing costs: The amount of money required to get the mortgage and the home.
- Earnest money: The amount of money you pay the seller of the home to show that you’re serious about buying the property.
- Down Payment: The amount of money that you pay upfront to the mortgage lender to show that you’re serious about getting a home loan.
- Escrow: The third party that receives and pays money to the appropriate party throughout the home buying process. (Ex: You would pay your down payment to escrow, and then the mortgage lender would receive it from them.)
3. Ask around.
Sometimes the best way to get great service is to ask the people you trust. So, if you have friends or family who are homeowners, ask them where they’ve gotten their home loan. Ask your real estate agent if they have any recommendations. Ask your bank if they have a mortgage loan department. This will give you a good starting point to begin comparing home loan rates and pricing. However, it’s important that you don’t just go with the first company you see or that’s recommended. Shop around for the best rates! What may be good for others may not be the best for you.
4. Look at reviews.
Mortgage lenders usually have had tons of customers. So, in addition to getting the opinions of the people in your life, why not get recommendations from people who have worked with that lender already?
Just make sure you’re looking at reviews for your specific home loan partner AND the company they work for. Look for someone who has experience with your specific situation, whether you’re a first-time home buyer, someone with low credit, someone who is moving internationally, etc. The company a broker works for may fit your needs, but a particular person may not.
5. Find out about hidden terms and fees.
There can be a lot more upfront fees when buying a home than expected. So, it’s important to prepare for what you may have to pay. You’ll be expected to pay for various application fees, closing costs, appraisal fees, down payments, deposits, and more. So, do your research about what you can actually afford over a long term as well as immediately.
There may also be a fair amount of terms that you haven’t heard of until you’ve started seriously looking for a home. Be aware of things like lock-in periods, qualification requirements, points, and the different types of financing.
6. Get home insurance quotes.
Just as it’s important to shop around for the right home loan partner, it’s vital to shop around for your home insurance as well. Most mortgage companies will require you to get home insurance to finalize the loan, but you’ll want to make sure that your homeowners policy fits your lifestyle and your budget. So, look at the different types of coverage you’ll need for your location and your particular home, make sure you have enough coverage to rebuild if disaster hits, and make sure you’re getting the best rates for what you need.
The best way to do all three in one easy step is to call our experts today! Our specialists have years of experience and access to a wide market of home insurance carriers. So, we can shop home insurance rates for you while you focus on buying your forever home. To start getting quotes for homeowners insurance that fits your needs, just give us a call, fill out our easy online form, or LiveChat with our experts today!