How to Research New Home Mortgage Lenders

In the market for buying a new home? That’s some exciting stuff. But whether it’s your first time buying a home or you’re just not familiar with what rules might have changed, there are a few things you’ll want to research before you start browsing homes online. These tips on mortgage lenders and new home loans will make you better prepared to make an offer and secure the home of your dreams. 


How to Research New Home Mortgage Lenders

This process might vary, depending on whether or not you’re a first-time homebuyer. New home buyers often qualify for incentives, like relaxed requirements or lower down payment options. One thing that’s important to note though is that you can get quotes from more than one lender without it impacting your credit score. 

3 Quick To-Do’s

1. Check in on your credit score. This is something you can do for free online or sometimes, through your bank.

2. Shop multiple lenders for the best annual percentage rate (APR), with an eye out for any origination fees.

3. Research assistance programs and government loans.


Why Mortgage Lenders Are Important

When researching new home loans, you’ll want to decide first on the type of loan that you think will fit you best. Then it’s time to start considering mortgage lenders. Mortgage lenders are typically financial institutions or a mortgage bank that underwrites your home loan. They’re the ones who decide the big things, like terms, interest rate, and repayment schedule—based on your ability to repay the loan. That’s why your credit score counts. Most financial institutions consider that a good indicator of how good you are at paying back money that you’ve borrowed. 


You might also work with a mortgage broker. They’re the go-between you and a lender, but they don’t set things like terms. They can, however, sometimes help you find better terms although their services come at a cost. 


Different Types of Mortgage Lenders

There are all types of lenders you might work with when you’re browsing for a new home loan, including community mortgage lenders and national mortgage lenders. Finding the right one can help you afford the house you want on the fairest terms. 


National Mortgage Lenders

When you’re considering a new home loan, you are most likely to go through a national mortgage lender. If you want to avoid mortgage broker fees, you can go through a direct lender—those include banks, credit unions, and online entities. You can work with more than one mortgage lender to try and find the best rate available to you. 

The only issue with national mortgage lenders, however, is that their requirements can be somewhat stringent. Typically, they expect you to have a credit score of at least 600 or so. 


Community Mortgage Lenders

The difference between national mortgage lenders and community mortgage lenders is that community mortgage lenders are more flexible when it comes to working with home buyers who have a more unique financial situation. You’ll want to do your research on these companies though and find reputable ones that offer the type of loan you’re looking for. Conventional fixed-rate loans are probably the safest bet in this situation because your monthly payments won't change over the life of your loan. 


Different Types of Home Loans

There are many types of home loans to consider when you’re ready. Here are the top four.

 1. 30-year fixed-rate mortgage

The most popular type of new home loan, a 30-year fixed-rate mortgage, has an interest rate that’s set for the entire 30-year term. It’s a good option if you need to have lower monthly payments.


2. 15-year fixed-rate mortgage

With an interest rate that remains the same over its 15-year term, this typically offers lower interest rates but higher monthly payments.


3. Adjustable-rate mortgage

A home loan with an initial rate that’s fixed for a specified term then adjusts periodically. The initial rate is usually lower than a 15-year fixed-rate and can typically be locked in for one, five, seven, or 10 years.


4. FHA mortgage

A home loan insured by the Federal Housing Administration, these loans are backed by the government and designed to help borrowers of more modest means buy a home. They allow down payments as low as 3.5% with credit scores as low as 500 to qualify. 

While the process of trying to figure out a new home loan isn’t the most riveting, buying a new home can be an incredibly rewarding experience. And the more research you do upfront, the better prepared you will be to make an offer on the home of your dreams.



Contributed to Your Home blog

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Published 08.23.2021

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