Whether you are buying your first house or you are a seasoned buyer, the mortgage process can be a very daunting one. Doing your research about mortgage lenders, what each one can provide and how the entire process works is essential before even contacting a lender to begin the mortgage process.
One of the first things you should be aware of when shopping for a mortgage is to be sure to contact several mortgage lenders, not just one. Each lender has its own programs, requirements and abilities to lend. By limiting yourself to just one lender, you are limiting your options as well as possibly costing yourself more money than necessary. Think of it like shopping for a home appliance or any other large purchase, a majority of the time you would shop at several stores to find the best price; the same theory applies to mortgages. Different mortgage lenders have different rates and prices to obtain those rates. There are lenders that will underwrite your loan for only a processing fee, title fees and legal fees. On the other hand there are lenders that charge upfront fees to process your mortgage. If you are credit-worthy, lenders will be willing to work with you regarding pricing.
Lenders come in a broad range of sizes. A lender can be your local, small-town bank that only lends to its regional area or a lender can be large enough to lend statewide or even nationwide. On top of that there are also government agencies that deal with FHA and Freddie Mac loans. Exploring your options and knowing your credit history will be the best step you can take.
One of the most important things to remember when it comes to mortgage lending is that everything is negotiable. You aren't obligated to accept the first offer that is put in front of you, even if a lender says that you are pre-qualified. Each lender is required to give you a Good Faith Estimate of the charges that are associated with the loan that they are proposing, as well as the APR that is a result of this loan. Obtain a Good Faith Estimate for each proposal you receive and compare their findings. If you aren't comfortable with the monthly payment or upfront charges, go ahead and negotiate them. If the lender isn't willing to negotiate, contact a different lender.
Obtaining a mortgage is a life-altering decision, and one that you will have to live with for a very long period of time, so be sure to do your research, know your lenders and know your rights before you start contacting the lenders.