Find a Mortgage Lender | New Homes Market Center

Many people find a mortgage lender simply by looking for the lowest rate, most favorable quoted interest rate, and minimal points and/or up-front costs. Using this as the only basis for choosing a mortgage lender is very risky. By way of example, you might find yourself in an uncomfortable position come closing time because you did not actually receive the quoted rate and some of the closing costs were higher then expected. A mortgage lender is not legally required to give you the interest rate he or she quotes you, and many mortgage lenders will quote on the low end just to get your business. Then, at closing, they will have some explanation for why you could not get that interest rate such as “the market has moved.”

While it is obviously important to get a competitive interest rate on your mortgage loan, you should know that there are two different types of rates: quoted interest rates and real interest rates. You can use Freddie Mac’s National Average to see if you are getting a good interest rate. Use their past week’s national average as a guide (freddie mac). These rates are the national average for the past week and do not reflect construction loan rates, so please use these as a guide only. Construction loan rates vary slightly with your credit risk or whether this is an investment or homestead, but you can expect to pay prime plus 1% or 2% for a construction interest rate. Talk with your New Home Specialist who can pair you with an interim/construction lender.

When you first start calling different mortgage lenders, you can take steps to protect yourself from “predatory lending.” Lenders use 26 criteria when quoting rates. If the lenders quoting you rates, do not get the answers to each of these points, then it is likely that the interest rate quote is not accurate.

  • Rate Criteria Checklist
  • Loan Size
  • LTV (loan-to-value ratio)
  • CLTV (loan-to-value ratio)
  • Credit Scores
  • Credit History
  • Escrows
  • Closing Date
  • Loan Type
  • Property Type
  • Occupancy Type
  • Residency
  • Available Assets
  • Asset Seasoning
  • Co-borrowers
  • Debt/Income Ratios
  • Housing Ratio
  • Purchase Plus
  • Employment Type
  • Employment History
  • Documentation
  • Transactional DI
  • Re-caste Option
  • Relocation
  • Seller Contributions
  • Gifts
  • Cash Out/Home Equity Loans

Important “Non-Interest Rate” Factors When Choosing a Lender

Keep in mind when first choosing a mortgage lender for your new home, that there are many factors other than interest rates that affect the loan you receive. The wrong loan can cost you a lot of money. A good lender acts as a mortgage planner and tries to find the best loan for your particular needs. Look for a loan officer who not only has the ability to search between a wide variety of loan programs but who is also someone you can work with and develop a trusting relationship. More detail about closing costs and finding the best loan for your particular requirements follows in later sections.

Last, be sure to ask the mortgage lender if their quote is on a loan program that has a prepayment penalty or a negative amortization feature. Loans with these features might carry better interest rates; however, a loan with a prepayment penalty may require you to pay a large amount of money if you decide to pay off your mortgage by cash, refinancing, or selling your house before the end of the term. Prepayment penalties limit what you can do with your loan in the future and might end up costing you a large sum of money. In addition, a negative amortization feature may make it seem like your payment is lower, but over time, the balance of your total loan amount will grow. With this loan type, you are adding to your loan while losing the equity you gain in your new home.
New Homes Market Center has a team of mortgage brokers and bankers that are pre-screened which our clients can rely on. To access our team, please contact one of our New Home Specialists today and we will help you get the financing you need on your new home.

Key questions to ask your mortgage lender as you shop for your home loan

  • What are the total points and origination fee for the quoted interest rate?
  • Can I lock-in the quoted interest rate and points over the telephone today?
  • How many days are the interest rate and points locked-in?
  • Do you have a written agreement that locks in my interest rate and points?
  • Will you fax or email me the agreement?
  • What charges will show up on my settlement statement at closing that pertain to you and your investor?
  • Will you fax me the detailed list of charges or a Good Faith Estimate?
  • Does your company make the loan approval or underwriting decision, or will your investor approve my loan?
  • How many days will it take to obtain a formal loan approval?

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