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Finding the Right Mortgage Lender

May 29, 2008  |  Difficulty: Easy

Path to mortage
 
Before setting your heart on that perfect piece of property, you need to know how much money you actually have to spend. So, it is wise to go through the pre-approval process first.

The pre approval process is beneficial in a few ways:
  1. You save time by only looking for properties that are within your budget.
  2. You get to see your credit rating.
  3. It will give you an overall good idea of what interest rate you will need to pay.

You may know that you can go with a credit union, a bank or a finance company to get your needed home mortgage loan. The main question is, what is the difference between these three options? Finding the right mortgage lender is very important. The significant differences include the interest rate that you are able to get, the type of services that are available to you and whether or not you meet the minimum qualifications to be able to borrow from the lender. The more you research different lenders, the better chance you have of getting what you need. And yes, you can be pre-approved with more than one lender so that you can truly evaluate who is giving you the better offer. The difference between one lender and another could be a small percentage off the interest rate. This may seem to be a small contrast, but it can actually save you thousands of dollars during the course of your contract.

The lender will take into account your income and payment history, as well as your credit history, before determining your interest rate and how much mortgage you can receive. To know exactly what your price range is, add the money you have saved up for the down payment with the home mortgage amount that you have been approved for. It’s easy! And now you know how much is in your budget before you start searching for your new home.

Another important factor that you need to think about during the pre-approval process is how much money you need to spend monthly in order to remain on a stable payment schedule. Most people do not want to spend 40%-50% of their monthly pay on their home mortgage, especially when other bills and financial obligations need to be considered.

To avoid getting into a financial overload, look at the mortgage that you are pre-approved for, and then decide what type of payment schedule will work best for you. This may mean taking an offer with a lower mortgage amount, but at least you will be able to live up to the monthly payment commitment.

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