When you are ready to shop for a loan, you can work directly with a lender or with a mortgage broker representing many individual lenders.
Direct lenders are lending their own money, have in-house programs, and make the final decision on your application. Brokers are intermediaries who represent many lenders and loan programs from which to choose. If you have special financing needs or want to shop the market for the best deal, an experienced broker may be able to find the best loan for you.
Along with shopping the source, you'll also have to shop the total costs of the loan, including the interest rate, broker fees, points (each point is one percent of the amount you borrow), prepayment penalties, the loan term, application fees, credit report fee, appraisal and a host of other items.
Whether you decide to use a lender or a broker, here's a quick look at the process:
- Build a list of mortgage companies. Ask your Real Estate agent for recommendations. Check the newspaper's real estate or business section. Talk to people you know who have bought or refinanced a home recently or just search the Mortgage101.com directory of mortgage companies.
- Call, visit, email or browse the website of the companies on your list. Get a feel for what it will be like to work with them, and how they approach your needs.
- Compare rates for similar loans. When comparing rates between companies, be sure the rates are for comparable loans including fees and other costs. You can also compare rates against the national or state averages in the Mortgage101 Daily Rate Survey.
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