Selecting the best mortgage lender is an important but often overlooked step of the mortgage process.
Many people simply go to the bank that has their checking accounts and ask them for a mortgage loan.
This won't always garner you the best-possible deal.
Pre-qualify yourself A good rule of thumb is that the maximum amount for your monthly mortgage payment should be no more than one-third of your monthly income.
There are plenty of online places you can use to pre-qualify yourself for a mortgage.
You simply type in how much you make and how much debt you have, and the programs will tell you how much mortgage you can afford.
Pre-qualifying yourself is important, so you can go in to see a lender and know how much home you want to buy.
Ask around Ask your friends and neighbors about their experiences with mortgage lenders.
Find out which ones they liked and which ones they didn't like.
If you hear about one mortgage lender having more negative relationships than favorable ones, you may wish to steer clear of them.
Mortgage broker Consider using a mortgage broker.
Mortgage brokers will charge you an added fee, but you can often make up that fee in the long run by using their abilities to find you the best-possible loan available.
A good mortgage broker will have relationships with multiple lenders and be able to truly find you the best deal available to you.
Look for low annual percentage rates You want to find a lender who will offer you the lowest annual percentage rate you can get.
This is the amount of interest you'll pay on your loan.
Be wary of exceptionally low APRs, however.
Lenders with exceptionally low APRs may rob you by charging high closing costs.
Look for low closing costs You want a lender who won't charge you an arm and a leg just to close the deal.
Make sure the fees and costs associated with your mortgage are realistic, too.