Research Several Different Lenders

Home loans can be obtained from different types of lenders, such as; commercial banks, mortgage companies, thrift institutions, and credit unions.

You can also obtain a home loan from a mortgage broker. Brokers do not lend money themselves, but arrange the transaction between the home buyer and financial institution for a fee. The advantage to using a broker is they typically have access to several lenders, providing you with a wider selection of loans and terms. In the same way you shop different financial institutions the same approach should be used when choosing a mortgage broker.

When researching who you are going to use for your mortgage, it is essential to make sure you are dealing with a broker or a lender. Some financial institutions operate as both lenders and brokers. Many times it is not clear whether an institution is a lender or a broker unless you ask. The importance for finding out this difference is brokers are typically paid a fee for their services and may it be a fee that is, in addition to the lender’s fees that could be in the form of points paid at closing or as an addition to your interest rate, or both. When dealing with a broker it is crucial to ask how they are being compensated, and again comparative shopping is imperative. The key to finding the right mortgage is being prepared to negotiate.