It takes a village to buy a home! That’s not the original quote, but you get what we mean.
When you go through the home buying process, you’re going to need a team
of rockstars around you to make things happen. If you’re shopping in the Tri-State area, that means you’ll want to work with the best real estate agent and the best mortgage lender in New Jersey.
Working with the best mortgage lender and real estate agent can make all the difference in your home buying experience. The right real estate agent will be able to walk you through the process every step of the way. Searching for your home should be a breeze.
Working with your mortgage lender should be no different. Applying for a mortgage can be an in-depth, overwhelming process. Unless, of course, you’re working with the right one.
If you’re wondering how to find the best mortgage lender in New Jersey, you’re in luck. We’ll cover the steps you need to take during your search, as well as the questions you need to ask your potential lenders before working with them.
Types of Lenders
Before we dive into how to find a mortgage lender, let’s help you get familiar with the different options you have available. When most people envision applying for a mortgage, they see themselves walking into a bank and filling out paperwork. But, there are more options than just your standard bank.
It’s important to learn about them because choosing the right one could mean the difference between you finding a great mortgage and a not-so-great mortgage.
We’ll cover these first because they’re the most popular. These are your banks and credit unions, the options that everyone and their uncle know well.
One of the advantages of working with a direct lender is that the same person will handle your application from start to finish. Having the same contact person throughout the process can make things a lot easier on you. Developing a deeper relationship with the lender helps when it comes to asking questions.
They may also be more willing to help when it comes to overcoming obstacles.
The downside of working with a direct lender is that it limits your options. You’ll only have access to the loan products that a particular bank or credit union offers.
If you choose to go this route, it’s helpful to work with a bank or credit union where you already have an account. If you already have a checking or savings account with them, you may receive access to better mortgage rates and terms.
Direct lenders do what they can to take care of their existing customers.
Your other option when it comes to getting a mortgage is to work with a mortgage broker. Mortgage brokers have partnerships with several different lending institutions. As a result, they have a wide variety of loan products at their disposal.
Think of them as a “middle man” between you and a large group of different lenders. The advantage here is that you have much more flexibility. Your mortgage broker can shop around and compare the rates and terms of multiple lenders.
Each lender has its own underwriting requirements when it comes to the approval process. If a particular lender tells you “No,” your mortgage broker may have access to another lender who says “Yes.”
Since brokers have access to more products, they can also be helpful if you’re shopping for a specific type of loan. If you’re a military veteran, you might be shopping for a VA loan. You may also be looking for a first-time homebuyer or renovation loan.
Since brokers have access to multiple lenders, they can focus more on these niche products.
The one downside here is that brokers get paid via a commission on the products they sell. This means if a particular lender gives them better commissions, they may favor their products over those offered by other lenders.
If you choose to work with a lender, make sure you do your research. Work with someone who has access to great products but also has great customer service reviews.
Finding the Best Mortgage Lender In New Jersey
Now that you’re familiar with your lending options, it’s time to find your rockstar mortgage lender. Whether you’re searching for a mortgage lender in New Jersey or any other state, there are a few key things you’re going to want to consider.
Choose A Loan Type
The best loan product for you is going to depend on a lot of factors. You’ll need to take a look at your credit score, your debt-to-income ratio, your monthly budget, and your down payment amount.
Standard loans from a direct lender will require a down payment that’s 20% of the purchase price. The average home price in the U.S. is $374,900. That means you’d have to come up with a down payment of roughly $74,000. That’s a lot of money to gather.
Some people do a great job at saving money or have relatives to help them achieve that type of down payment. If that’s not you, then you may want to consider another loan product. The Federal Housing Authority (FHA) offers a loan program that allows for a down payment as low as 3.5%.
There are rules to qualify for that program, but it may be a loan product that works better for you and your goals.
If this seems overwhelming, don’t worry. You don’t have to know everything about loan products. Both direct lenders and mortgage brokers can help guide you toward a loan product that works best for you.
Once they have a conversation with you and take a look at your “financial snapshot” (your credit score, income, expenses, etc.) they’ll be able to help you along your way.
Read the Fine Print
Once you and your mortgage lender make the decision on which loan product is right for you, you’ll need to do a little bit of research. The best mortgage lender in New Jersey should be able to walk you through the details of your mortgage agreement. They’ll be able to go over the terms with you and answer your questions.
But, even though your lender or broker is helping you, you still want to do some research on your own. Read the fine print of your mortgage agreement before you sign. Understand your lender’s rates and terms.
You’ll also want to pay attention to the mortgage fees. Lenders will charge fees like origination fees and “points” to generate your loan. A point is typically worth 1% of your loan amount and may drop your interest rate by a quarter of a percent.
You may be excited if you manage to secure a loan with a low interest rate. But if you’re not watching the upfront fees associated with your loan, they could wipe out any savings you hoped to get with your low interest rate.
Pick Their Brain
One of the most important qualities of a good lender is they know their stuff. You shouldn’t feel afraid to ask questions about your loan. Obviously, you can’t expect your lender to know everything, but they should have a good handle on the process and the basic loan products.
What really separates the best mortgage lender is their knowledge of assistance programs available to you. Government agencies and community organizations will give mortgage assistance to many different groups of people.
One of the most popular is first-time homebuyers. Most local municipalities, and also the federal government, will have programs available to help first-time buyers complete their home purchases. Some programs may give money for down payment assistance, and others may help to cover closing costs.
Regardless of the program, you want to make sure your lender is knowledgeable about the money that’s available for you.
Focus On the Relationship
Buying a home is the biggest purchase most people make in their lives. You want to work with companies that are reliable and trustworthy. It can be easy for you to get hung up on working with a particular company because of their name and reputation.
It’s important not to do that. You want to focus on the person you’re working with just as much as the company. Large banks can have great reviews but if you’re working with one of their loan officers who lack experience, the process can be a nightmare.
Trust and experience should be your primary concerns when selecting a lender. If you don’t know where to start, try asking around. Your family, friends, and co-workers may be able to recommend a great lender for you.
You can also ask your real estate agent. Realtors usually have a network of all of the professionals you’ll need to purchase your home.
Perfecting the Mortgage Process
That’s it! Now you know everything you need to know to find the best mortgage lender in New Jersey. Focus on the person and not the company. Once you establish that relationship, you can decide on your loan product, get comfortable with the terms and fees, and get the most out of their knowledge and expertise.
For a mortgage lender you can trust that has the experience you need, contact the team at RealFi Home Funding today. We’re more than happy to answer any of your mortgage questions and can help you in any way necessary.