Buying a home is the most significant financial decision most people will ever make. Whether you’re a first-time homebuyer or a seasoned homeowner, you’ll most likely need a mortgage to make it happen. Sure there are some buyers who can afford to make an all-cash offer, but if you’re not in that category you should plan to work with a lender when purchasing your home.
In basic terms, a lender evaluates your financial background and determines how much money they’re willing to let you borrow. You can then use that money to purchase your home. Over time, you pay back your lender in monthly installments.
While the concept is simple enough, the details of mortgages can get complicated — especially for those new to the homebuying market. While online tools and resources have simplified some aspects of the process, you still need to do careful research before committing to a lender or loan product. Ready to become a homebuyer and want to apply for a mortgage online? Here are four tips for getting started.
1. Compare lenders
Even when mortgage shopping with traditional banks and brick-and-mortar lenders, experts don’t recommend taking the first offer you see. Not only do you want to find the most competitive rates and terms available, you also want to be certain that you’re dealing with a qualified, knowledgeable team. “Some homebuyers have been able to get a mortgage quickly online,” says Compass real estate agent Demi Lee Antelo. "But others have said that the estimates they got weren’t the most accurate.”
Better Mortgage is a digital lender that’s transparent about its process. Not only can borrowers get pre-approved in minutes, you can also pay no lender fees from application and origination to underwriting.
2. Have a real conversation
Whether you’re going with a brick-and-mortar bank or a digital lender, it’s crucial to work with a team that’s accessible and easy to reach. Things can move quickly in real estate and your lender should be available, be it over a phone call or a digital chat. If they can’t accommodate your timeline, that’s a bright-red flag.
Along with its zero-lender-fee policy, Better also provides one-on-one support with its home advisers. These qualified experts can get to know your personal needs and explain every step of the process — from the time you’re house hunting all the way to closing.
“Financing is not a one-size-fits-all [situation],” Antelo says. “Call me old school, but a good person-to-person conversation is what helps a lender truly uncover what would be the best fit for someone financially.”
3. Get the details
When it comes to mortgages, the fine print matters. Small details like property taxes, HOA fees and mortgage insurance can have a big impact on costs over the life of your loan. Do as much research as possible and enlist the help of an expert if necessary to truly understand your homebuying budget. Be realistic about the short-term and long-term affordability of your mortgage and consider how it will be impacted by the loans and interest rates you qualify for. If you’re a first-time homebuyer with budget restrictions, working with a transparent lender can be the key to maximizing your buying power.
4. Find what’s right for you, and only you
Home financing is not a cookie-cutter process—finding the right mortgage is just as important as finding the right house. Determining the best loan for you will depend on your personal goals and priorities. For example, a pair of newlyweds with a modest down payment savings will need a different loan than a family of five expanding to their forever home. Don’t let a lender push you into a loan that’s not a good fit.
About Better: Better is a family of companies. Better Mortgage Corporation provides home loans (NMLS #330511); Better Real Estate, LLC provides real estate services; Better Cover, LLC provides homeowners insurance policies; and Better Settlement Services provides title insurance services.