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How to Find a Lender
Today, lenders can be found through a variety of sources. In addition to calling on ads in the newspaper, you can also find and apply to lenders over the internet, and through referrals from your REALTOR. We would be happy to suggest lenders we have used successfully, who have proven themselves competitive and capable even with problem properties or poor credit.
This April 2020 article, “Best Mortgage Rates Based on In-Depth Reviews,” written by a team of researchers called ConsumersAdvocate.org, is a good resource to get you started.
Choosing the Right Lender
Interview several lenders to evaluate the following:
- Ability to explain things clearly and return your phone calls in a reasonable time period
- Competitiveness of interest rates, costs & fees.
- Availability of loan programs that suit your credit profile and desired property
- Access to local loan approval committee that understands the kind of property you are buying
Choosing the Right Kind of Loan
Today there are so many types of loans on the market that it is beyond the scope of this page to list or explain them all. Your lender is the best person to help you select a loan program to suit your needs. Below is a summary of the three most popular loan types we see in practice; for more detailed information click the link at the end of this page.
- Fixed loan: The fixed rate loan assures your monthly payments will stay the same over the life of the loan, which is typically between 15 and 30 years. Fixed rate loans may be best if you intend to hold the property for a long period of time, say over 7 years.
- ARMs (adjustable rate mortgages): ARM’s may be suitable if you plan to sell or refinance your home within the next few years. The starting interest rate is typically lower than a fixed rate loan, saving you money initially. However, it is important to understand the index, the readjustment interval, the capitalization rate and downside risks of an ARM before making a final decision to use this type of loan.
- Intermediate ARMs: Also called Hybrid Loans, these loans can offer fixed interest rates for the first 3, 5, 7 or 10 years after which the interest rate adjusts with the market every 6 months or year thereafter.