July 20, 2022
Choosing a mortgage lender can seem a bit daunting. After all, there are so many of them out there. Community banks, savings and loan institutions, mortgage brokers, national banks, credit unions, and online lenders may all provide mortgage services. However, before you sign a document as important as a mortgage, consider the reputation of the institution and the terms of your contract.
Here are 6 questions you may want to ask any potential lender:
1. How Long Have You Offered Mortgage Loans?
The longevity of an institution may be a good indicator of how well its staff does its job and serves its clients. Working with an experienced team that fully understands the lending can help to secure a loan that fits your unique situation.
2. How Can I Reach You If I Have Questions?
You will want to choose a lender that is responsive to your needs. If a lender does not return calls, ignores emails, or seems impatient with questions, it could be a red flag. Your loan team should be accessible and should provide multiple ways for you to get in touch.
3. What is the Minimum Credit Score I Will Need to Qualify?
Ask what the lender’s minimum credit score is to qualify for a home loan. Lenders set their own acceptable rates and generally tie credit scores to the interest rates they will offer you. A higher credit score may make you eligible for a lower rate. Ask about their general policy before you begin the process.
Don’t know your credit score? Most credit card companies and many banks will provide a FICO credit score for free to their customers. You’re also entitled to obtain a free credit report from each of the credit agencies, Experian, TransUnion, and Equifax, once per year. To find out what your credit score is, inquire at annualcreditreport.com. Consider examining your reports from each of the three major credit agencies for any errors and try to address them before you apply for a mortgage.
4. What is the Debt-to-Income Ratio I Will Need?
The debt-to-income ratio refers to the amount of monthly principal, interest, taxes, and insurance (PITI) you will owe, plus your other expenses, divided by your monthly income. For example, if your PITI and expenses will be $2,000 per month and you earn $6,000 per month, your debt-to-income ratio is 33%. Many lenders want borrowers to have a debt to income ratio of 36% or less with 43% as a maximum, but it will vary by lender. If you are able, you may want reduce your ratio by lowering the requested loan amount and making a larger down payment.
5. What Are Your Interest Rates and How Many Points Will You Charge Me?
A low interest rate may not be the best deal if you also have to pay high mortgage points and other fees. Comparing interest rates against the Annual Percentage Rate may provide insight as to the full picture of the mortgage.
6. How Much are the Origination, Lending, and Other Fees?
Fees can vary by lender, so ask what the costs will be and then compare. Among the normal charges you might see are fees for a title search, survey, recording, and/or appraisal fees. The lender is required by law to provide the Loan Estimate within three days after you apply for a mortgage. It will also include an estimate of your monthly payment, the full closing costs, estimated costs for taxes and insurance, and details about how interest rates and payments might change over time.
Looking for a mortgage broker to help you find the best mortgage lender for you? Contact Mariner Finance* today to help you locate a local branch that can address your specific needs.
*Mariner Finance’s loan officers are licensed and regulated financial professionals who work to connect potential borrowers with mortgage lenders who best fit the borrower’s financial situation. Mariner Finance does not act as an originating lender for mortgage loans or the refinancing of mortgage loans. See our Licensing & Disclosures page for more information.
The information provided in this article does not constitute financial advice and is provided for educational purposes only without any express or implied warranty of any kind. This article is not intended as legal, tax, investment, or any other advice, and Mariner Finance does not offer credit repair services. Consider talking with an appropriate qualified professional for specific advice.
Blog posts are for informational purposes only.
†We offer personal loans from $1,000 to $25,000, with loans terms from 12 to 60 months. Minimum and maximum amounts dependent on an applicant’s state of residence and the underwriting of the loan. Loans between $1,500 and $15,000 may be funded online. Loans greater than $15,000 or less than $1,500 are funded through our branch network. Specific interest rates and fees are determined as permitted under applicable state law and depend upon loan amount, term, and the applicant’s ability to meet our credit criteria, including, but not limited to, credit history, income, debt payment obligations, and other factors such as availability of collateral. Not all rates and loan amounts are available in all states. Additional fees may apply to some loan offers; some state required and/or permitted fees may be treated as prepaid finance charges. Any such charges shall be in addition to the loan amount requested and/or approved and shall be fully disclosed to the applicant on his/her loan agreement. Not all applicants will qualify for the lowest rates or larger loan amounts, which may require a first lien on a motor vehicle not more than ten years old titled in the applicant’s name with valid insurance. Our loan by phone and online closing process requires a compatible mobile or computer device on which you can access your email and electronic documents. Not all loan types are eligible for loan by phone or online loan closing.
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. As a result, under our customer identification program, we must ask for your name, street address, mailing address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents.
For any stated annual percentage rate (“APR”), the APR represents the cost of credit as a yearly rate and will be determined based upon an applicant’s credit at the time of application, subject to state law limits. A range of APR’s may be applicable, subject to state law limits and individual underwriting. Not all applicants will qualify for a lower rate. APR’s are generally higher on loans not secured by a vehicle, and the lowest rates typically apply to the most creditworthy borrowers. All terms and conditions of a loan offer, including the APR, will be disclosed during the application process. As an example, with an amount financed of $5,000.00 the borrower receives $5,000.00 at an APR of 29.99% and an interest rate of 28.77% which includes a finance charge of $3,640.96. Under these terms, the borrower would make 48 monthly payments of $180.02, for a total of payments of $8,640.96. The amount financed may not be the net proceeds paid if charges other than interest are included in the loan.
*The process uses a “soft” credit inquiry to determine whether a loan offer is available, which does not impact your credit score. If you continue with the application process online and accept a loan offer, or are referred to a branch and continue your application there, we will pull your credit report and credit score again using a “hard” credit inquiry. This “hard” credit inquiry may impact your credit score.