How to Choose the Right Lender When Buying a House in Ankeny

If buying a house is on your agenda, one of the important things to do early is to find the right lender for your needs. When you buy a house, you’re in it for the long haul – sometimes 30 years – so you need to find the best lender. But that doesn’t mean simply finding the lowest interest rate possible. You also need to be comfortable and able to work with the company originating the loan. So check out our tips on how to choose the right lender when buying a house in Ankeny.

Lender Options for Buying a House 

You should first be aware of the main mortgage loan options for people buying a house. These are . . . 

  • Conventional banks – These offer a portfolio of services, including checking, savings, mortgage loans, and other loans. 
  • Credit unions – Much like banks, they offer a portfolio of services that include mortgage loans. To get a mortgage loan with a credit union, you have to be a member, but they do offer personal service and members-only deals.
  • Nonbank mortgage lenders – Nonbank mortgage lenders issue more mortgages than other lenders and often specialize in mortgage loans. The main advantages of using one of these are speed and a higher likelihood that they will work with you if you have some blemishes on your credit history.
  • Mortgage brokers – A mortgage broker can work with you to search multiple lenders and find the best loan option for your situation. The drawback is that it may cost you more because the broker typically earns a fee or commission for the service.
  • Mortgage marketplaces – These are companies that enable you to review interest rates from multiple lenders and choose the one you want. It can be a good way to find a great rate and sometimes a deal on closing. 

Preparing

The next aspect of choosing the right lender when buying a house involves financial preparations on your part in order to get the best rate possible. The steps are . . . 

Working on Your Credit Score

Experts advise checking your credit score several months before applying for a mortgage. That way, if you need to work on improving it, you’ll have ample time to do so.

Saving for a Down Payment

Ideally, you would save up enough to pay 20% down to avoid private mortgage insurance and to have smaller monthly mortgage payments. But you can get mortgages that require as little as 3% down.

Establishing a Stable Income

A lender will want to know that you have a history of stable, reliable income. If you don’t, you need to establish that now.

Tips for Choosing the Right Lender

Once you understand your options and have your financial house in order, it’s time to begin shopping lenders for buying a house. 

Determine What Type of Mortgage is Right for You

  • Conventional loan – Typically for borrowers with good credit and sometimes requiring only 3% down
  • VA loan – For active and veteran members of the military and doesn’t require a down payment
  • USDA loan – Offered to those buying in a rural area and with no down payment requirement
  • FHA loan – Has a lower credit score requirement than others and requires as little as 3.5% down
  • Jumbo loan – Used to finance home purchases that a simply too expensive for conventional loans

You also need to consider the loan term length, which is typically 15 or 30 years, as well as whether a fixed-rate or adjustable-rate mortgage would be better for you. Your Ankeny agent can help you get a better handle on this. Just call (515) 210-4550 to learn more.

Compare Interest Rates From Multiple Lenders

After you determine what type of loan is best for, the next step is to search interest rates. You can search online for rates offered by various lenders, but keep in mind these are just estimates. A lender will have to pull your credit information and process a loan application to give you an accurate rate.  

Once you have a shortlist of possible lenders with rates you like, you can move on to the next step.

Apply for Pre-Approval With Several Lenders

Apply for mortgage pre-approval with the lenders on your shortlist. Pre-approval shows both agents and buyers that a lender is willing to loan your money for buying a house, and you will be perceived as a serious buyer.

Compare Loan Estimates

After applying for pre-approval with several lenders, you should then apply for a loan with at least three lenders and then compare the loan estimates. A loan estimate is a document a lender is required to provide after you apply for a mortgage loan. It details all the important information about the loan, including interest rate, monthly payment, various fees, and closing costs. 

Read the three loan estimates carefully and compare costs and terms. This will allow you to choose the right lender when buying a house in Ankeny.

The Final Step

The best last step is to secure the services of an experienced Ankeny agent. After you choose the right lender and get financing, you then have to find a house that meets your need and is within your price range. When you’re ready to proceed with buying a house in Ankeny, contact us today at (515) 210-4550.

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