InterestingRates

Finding the right lender for you

• You’ve decided the loan you want. Now you have to find someone willing to give it to you.

• Start by comparing the rates offered by mortgage lenders. Make a selection of the ones that interest you the most, generally those offering the lowest interest, smallest monthly payments, lowest fees and commissions. Apply for personal quotes.

• Once you have a shortlist then apply to be pre-approved. This usually requires completing an application telling the lender about how much you make, how much you have in savings – and how much you will use for a down payment on the house – and how many other debts you have.

• Using that information and your credit score, the lender will assess whether you are eligible for the loan you want and how much they can give you. In most cases it makes sense to get pre-approved even before you start house hunting as it can make the process of obtaining a loan considerably easier and quicker once you do find the property you want. The pre-approval process can take anywhere from a few hours to several weeks.

Know your own credit history

• Rather than leaving it down to the lender to find out about you, you should get to know yourself first. Begin by obtaining your credit score and credit reports, and if necessary find out what you can do to improve them, including correcting any mistakes. Also begin compiling the financial and background information the lender will want, from pay stubs, bank statements to tax returns.

• You must also decide how much house you can realistically afford. Here's a guide to help you determine how much you should borrow.

• If everything checks out, go back to the shortlist of lenders who have pre-approved you. Double and triple check and compare their offers. And, before making a final decision, judge how you feel about each one. What are their reputations like, how have they treated you so far – bare in mind, if you are like most people, you are going to be financially tied to them for a substantial period of time.

• The final steps

• With the house decided, your pre-approval letter and knowing how much you can afford, you are ready to apply for the loan from your chosen lender. Be prepared to provide more information and answer more questions, before finally agreeing on a loan and locking in an intitial interest rate. You should have everything ready at least 10 days before closing on your new home purchase.

Throughout the process, make sure you avoid some of the commonest mistakes people make when taking out a mortgage. The main mistakes of mortgage borrowers are listed here.