Get the most out of your mortgage lender

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Every June, the United States observes National Homeownership Month, a celebration of the American Dream. Almost all homeowners will need some type of mortgage to finance their home purchase, so if you’re looking to buy a new home, you need to be prepared.

Potential buyers can make their offer more competitive by getting pre-approved for financing before even bidding on a home. That means more homebuyers are looking to a mortgage lender first. Whether you’re buying a home, refinancing your home, or taking out a home equity loan, follow these tips to help you find a successful mortgage lender:

Know how much you can spend in advance. Before requesting information from a lender, it’s a good idea to know how much you can spend on a loan and the maximum monthly payment you can afford. This information will be a key part of your negotiations, so review your budget beforehand.

Know your loan options. Loan options include loan terms, interest rate type, and loan type. Loan tenure refers to the term of the loan, which can be 15 or 30 years. Shorter loans generally have higher monthly payments with lower interest rates. Interest rate types can be fixed or adjustable. Loan types can be conventional or part of a government program. Understanding the options will help you choose the best loan for your situation.

Get information from several lenders and brokers before making a decision. Get as much information as possible about each lender. Keep your options open to begin with, as different lenders may offer different rates, advises the FTC. Be sure to ask about interest rates, loan types, annual percentage rates, points, down payments, mortgage insurance, and any other fees. This will help you get a clear view of the real cost of the mortgage.

Be prepared to negotiate the best deal. Loan officers and brokers are allowed to retain some or all of the excess (the difference between the lowest available price and any higher price you agree to pay) from a loan as additional compensation. This means that you may be able to negotiate a lower price than they originally offered. The best way to negotiate is to ask the broker or lender to give you a written list of all costs and fees included in the loan. Then ask them if they will reduce or remove one or more of the fees. You can also show them a competitor’s offer to see if they will give you a better deal.

Watch out for scams. Researching a mortgage lender will help you get a general idea of ​​how much a loan will cost, which will help you spot and avoid deals that seem too good to be true. Beware of unsolicited calls and e-mails offering great mortgage rates or “no-fee” loans. Never give in to high pressure sales tactics.

For more information on buying, selling, building or improving your home, visit BBB Headquarters at BBB.org/HomeHQ. If you spot a scam, whether or not you lost money, report it to BBB’s ScamTracker at BBB.org/ScamTracker.

Rick Walz is the president and CEO of the Better Business Bureau serving northern Indiana, which serves 23 counties. Contact the BBB at 800-552-4631 or visit www.bbb.org.

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