Tips for Choosing a Mortgage Lender for Your Home Loan

Should you work with a mortgage broker or direct lender? Follow these steps to choose the best mortgage lender for your home loan.

Choosing a mortgage lender for your home loan is an important decision that should not be rushed. Should you work with a mortgage broker or choose a direct lender for your mortgage to buy a new home in North Carolina? How do you make the final decision on who to trust to find you the financing that matches your budget and personal needs? These are all important questions that can be answered by following our tips for choosing a mortgage lender in North Carolina.

Working with a Mortgage Broker

Mortgage brokers work as a middleman who helps buyers find financing for a home purchase from a variety of mortgage loan products offered by many lenders. Buyers who work with a mortgage broker will have more loan options than those who go through a direct lender. Mortgage brokers can save home buyers time when shopping for a loan and may be able to help them receive a more favorable interest rate due to a larger inventory of options.

However, mortgage brokers charge a fee for their service. The origination fee is generally between 1% to 2% of the loan amount and is paid by the buyer or by the lender. When a lender pays the mortgage broker, buyers usually receive a higher interest rate and stricter loan terms. Ask your broker to review all your options and scenarios before making a final decision.

Choosing a Direct Lender for Your Mortgage

Unlike a mortgage broker who acts as a middleman, a direct lender loans the money directly to buyers. Home buyers who go through a direct lender (i.e., bank, mortgage bank, nonbank lender) will have fewer options for mortgage loan products than when working with a mortgage broker. Choosing a direct lender often depends on the customer service experience and available loans and interest rate options.

Customers who prefer a one-on-one customer experience often turn to smaller community banks where they can develop a personal relationship with their lender. However, larger banks and direct lenders can often deliver a lower interest rate to borrowers because they offer more loan products to their customers.

Steps to Take When Choosing a Lender for Your Mortgage

Talk to your North Carolina real estate agent and ask for recommendations on direct lenders or mortgage brokers. Don’t stop there, though. Ask friends, families, and coworkers for referrals as well. Taking these simple steps will help borrowers narrow down their choices.

Once your list is narrowed down, take the time to research every direct lender and mortgage broker on your list. Check out their websites, read reviews and visit the Better Business Bureau website during this online research phase.

After you have established a list of top choices, set up face-to-face appointments. Interview mortgage brokers and lenders to learn about their qualifications, experience and to ask for references. Get a feel for their personalities and whether or not you feel comfortable working with them.

Hopefully, these tips for choosing a lender for your financing answered some of the questions you have had about obtaining a mortgage. Make sure to check out our Buyer’s Guide for more mortgage articles and information on buying a home in North Carolina. Feel free to contact us directly to answer any of your questions or to discuss how we can help you find and buy your dream home.