The home-buying process has changed a lot, for the better, in the past two decades. That’s good news for consumers because it means they now have more choices when it comes to financing the purchase of a new home. There was a time where the local bank was pretty much the go-to resource when you needed a mortgage. Nowadays, buyers have at least a half-dozen methods to choose from, including online options, credit unions, mortgage brokers and others.
One thing hasn’t changed, house-hunters still seek bargains. That typically means shopping for the lowest interest rate. With most home loans lasting 20 or more years, even a tiny difference in interest rates can translate into huge savings. But it’s not all about interest. Consumers also want good service and prefer to deal with reliable, ethical lenders. There’s a lot that goes into the decision. Here is an overview of the major factors you should keep in mind when shopping for a home.
Why Banks Aren’t The Best Choice
Banks do a lot of mortgage business with their own customers but tend to be less experienced, overall, than lenders who specialize in these kinds of loans. It’s also a fact that even some of the largest institutions have very limited varieties of mortgage products, a major disadvantage for buyers who have special needs or want a wide selection. Additionally, traditional banks typically have higher fees, take much longer to close deals and impose stricter standards on borrowers.
While many people turn to their own bank for purposes of convenience and familiarity, there are just too many negatives to view these old-time financial organizations as the ideal place to borrow money for a new home.
Online Options Make More Sense
The advent of the internet has completely transformed the lending industry. Some of the largest, most reliable lenders operate online and can offer borrowers fast turnaround on approvals, answer questions quickly, and provide some of the lowest interest rates around. In fact, compared to traditional banks, online mortgage rates are often lower. The other built-in advantage of doing business online, besides speed and low rates, is choice. In less than an hour, most people can peruse rates, terms and fine print on five or more different lender agreements. Competition is good for buyers, which is why online mortgages are so popular.
Credit Unions And Mortgage Brokers
Credit unions are often a much better choice than banks when you are looking to finance the purchase of a house. Legally, CUs don’t have nearly as many regulations to follow and are able to offer a wider range of products at competitive prices than banks can offer. Brokers are specialists and can bring a lot to the table for consumers who want expertise, variety and competitive interest rates. They also offer quick closings and can walk you through the entire process. That way, you’re never wondering how long will it be before the application is approved.
Watch Out For Fraud
Always deal with lenders that are licensed and officially registered to do home loans. There are some unethical players in the market who offer super-low interest rates and promise to close on your deal in just a few days. Avoid anyone who makes you promises that seem too good to be true, especially when a large amount of your money is at stake.
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