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How to Choose a Lender
Choosing a Lender is a very important decision during the home-purchase process.
A good lender will get you competitive market rates, competitive fees and closing costs, and
will communicate often with you and all other parties involved to ensure a smooth closing.
A bad lender can overcharge for fees, severely mark up your rate, and in some cases,
can complicate the sale so bad that you could loose the sale and your earnest money deposit.
To ensure you choose the best lender and loan for your needs use these 10 comprehensive questions:
- What are the most popular mortgage loans you offer?
- Which type of mortgage plan do you think would be best for us? Why?
- What are your rates, terms, fees, and closing costs? Are there any hidden or additional fees beyond these costs?
- Will I have to buy private mortgage insurance? If so how much will it cost and how long will it be required? NOTE: Private mortgage insurance usually is required if you make less than a 20 percent down-payment, but most lenders will let you discontinue the policy when you’ve acquired a certain amount of equity by paying down the loan.
- Who will service the loan? Your bank or another company?
- How long is your loan lock-in period (the time that the quoted interest rate will be honored)? Will I be able to obtain a lower rate if they drop during this period?
- How long will the loan approval process take?
- How long will it take to close the loan?
- Are there any charges or penalties for prepaying the loan?
- Do you have a list of references of loans you have closed with similar circumstances to mine?
5 Factors That Decide Your Credit Score
Credit scores range between 200 and 800. Scores above 620 are considered desirable for
obtaining a mortgage. These factors will affect your score.
- Your payment history. Whether you paid credit card obligations on time.
- How much you owe. Owing a great deal of money on numerous accounts can indicate that you are overextended.
- The length of your credit history. In general, the longer the better.
- How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay promptly.
- The types of credit you use. Generally, it’s desirable to have more than one type of credit—installment loans, credit cards, and a mortgage, for example.
For more on evaluating and understanding your credit score, go to
www.myfico.com.
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