- Is the application online or offline
Due to the increase in lenders, some conduct the whole application process online, while some require an in-person visit. So make sure which you prefer and confirm that your lender is providing the service.
If you want to meet with a mortgage loan officer so that they can walk through the whole application process, then a digital platform is not for you. But if you dread talking to people, look for a lender offering digital services where you apply and submit all the documents online.
Online lenders may offer you lower rates and fees because they do not incur office space costs and no operation costs for their employees.
- The duration takes to close
Once you have found your dream home and entered into a purchase contract with the seller, your lender should take the shortest time possible to close on a loan.
However, the time it takes to close may be affected by several factors, including appraisals, inspection, and other paperwork that need to be completed before loan closing.
Therefore, be sure to ask your lender how much time they take before closing on a loan. Some lenders offer the buyer some options to speed up the process by taking care of all the time-consuming paperwork before you even start house hunting.
The answer to this determines which lender you opt for because the faster you can closer, the earlier you can move into your new home.
- Reputation
You must do your research before selecting a mortgage lender. Go on Google, and you will have everything you need to know about any mortgage provider at your fingertips. You should first check if they are licensed and registered with the state.
If you are looking at reviews, ensure that any mortgage company has at least 10 reviews. You should also check in with the better business bureau and real estate agency that is in charge of mortgage home loans in your region.
The best site for reviews is Yelp and Google reviews since it is next to impossible to create false reviews. Be sure to avoid mortgage lenders who’ve had unresolved complaints.
After selecting the right mortgage lender, you are guaranteed to have a smooth and stress-free borrowing experience. And you are sure that your pre-approved mortgage remains affordable throughout its life. So be sure to consider the factors above when choosing a lender.
- Stay Within Limit
Now that you’ve selected the right lender, it’s time to submit your home loan pre-approval. And after you get your mortgage pre-approved, put it in context. What does it mean?
Just because the lender has approved you to borrow up to a certain amount of capital, it does not mean that you must borrow that amount. The major mistake homeowners make is borrowing more than they can afford, which strains your finances because you may not keep up with mortgage repayments and your bills.
This forces you to forfeit some payments, which can cause you to lose your home.Make sure to work with your financial advisor or realtor because they will help you set your budget according to your mortgage pre-approval.
It is always best to take out less than what your lender has approved. This ensures that you have an easy time taking care of your bills, including mortgage loan repayments.
Mortgage Pre-approval Cautions
Although pre-approval offers buyers several benefits, it is best to note that just because a lender has issued you with a pre-approval letter, it is not binding as long as you have not entered into a purchase contract, you can change your lender at any time. That is why you should get a mortgage pre-approval from at least three lenders.
You must also note that a pre-approval letter has an expiry date and most lenders’ pre-approval letter expires after 90 days. And if you want to renew, you must resubmit your documents again if there is any change in your income or employment status.
Bottom Line
You should always apply for a mortgage pre-approval before house hunting, as it allows you to narrow down your house search and close on a home. You must ensure to select your ideal lender by using the factors above when choosing a lender.
