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7 Tips For Choosing A Great Mortgage Lender For Home Buying In Houston

August 8, 2022 | By Reef Merhi

Table Of Contents

When you're buying a home, choosing the right mortgage lender is one of the most important decisions you'll make. Finding a company that has a good reputation and can help you get the best deal possible on your loan will make a huge impact on your immediate and long-term financial goals.

To help you with this momentous decision, we're giving you 7 tips for choosing a great mortgage lender in Houston. We'll discuss the different types of mortgages available, what to look for when shopping around for lenders, and how your credit score affects your ability to get a loan. So whether you're a first-time homebuyer or not, read on for some helpful advice!

ONE: The right type of mortgage loan

Looking for your dream home? Then "home" is the important word! Not all mortgage lenders focus on residential home buying. Some mortgage lenders prefer to focus on other types of real estate. You want to make sure the lender you select knows what they're doing and has specialized expertise in the type of home loan you'll be using to make your purchase.

A home loan is different than other real estate loans

It's important to start with a mortgage lender who focuses on home buying as opposed to other real estate ventures. For example, a mortgage lender who focuses on commercial real estate may not be the best fit because they're not as familiar with the specific process and paperwork involved in a home purchase.

Home loan types

Another thing you need to consider when choosing a mortgage lender is what type of loan you need. There are three main types of home loans available: conventional, FHA, and VA. You want a lender who is experienced with the particular loan you will be using to purchase your home.

Conventional loan

A conventional loan is a traditional mortgage that is not insured by the government. These loans typically have fixed interest rates and terms, and they can be either conforming or non-conforming.

FHA loan

An FHA loan is a mortgage that is insured by the Federal Housing Administration. These loans are designed for borrowers with lower credit scores and down payments, and they typically have lower interest rates than conventional loans.

VA loan

VA loans are home loans guaranteed by the Department of Veterans Affairs. These loans are available to eligible veterans, active duty service members, and their surviving spouses. VA loans typically have lower interest rates than conventional loans, and they can be either fixed-rate or adjustable-rate mortgages.

TWO: Shop around for mortgage lenders

Once you know what type of loan you need, you can start shopping around for mortgage lenders. There are a few things you should keep in mind when doing this.

Mortgage lenders for first-time homebuyers

First-time homebuyers may want to look for mortgage lenders who offer programs specifically for them. These programs can help with down payment assistance or closing costs.

Lenders who work with self-employed buyers

If you're self-employed, you'll want to find lenders who are willing to work with borrowers who have nontraditional income. For example, some lenders may require two years of tax returns from a self-employed home buyer instead of the standard one year. It's helpful to know this information upfront.

THREE: Understand your credit score

It's important to understand your credit score and how it affects your ability to get a loan. You can typically pull your credit reports online for free, or through your bank or credit card company.

What are credit scores?

Your credit score is a number that represents your creditworthiness. It is based on your credit history, and it is used by lenders to determine whether or not you are a good candidate for a loan. You get a score from each of the three major credit bureaus.

Why it matters when you're buying a home

Your credit score matters when you're buying a home because it will affect the interest rate you get on your mortgage. The higher your credit score, the lower your interest rate will be. This may impact how much house you can afford!

FOUR: Consider your down payment

The size of your down payment will also affect the interest rate you get on your loan. A larger down payment means you have more skin in the game, so to speak, and this will lead to a lower interest rate. It can also help you be more competitive if the home you're after has multiple bids.

Monthly loan payment

Your monthly mortgage payment is another important factor to consider when choosing a mortgage lender. You'll want to find a lender who can give you a loan with monthly payments that fit into your budget. Your payment will include other expenses, such as property taxes, homeowner's insurance, and possibly mortgage insurance.

Private mortgage insurance

If you're putting less than 20% down on your home, you may be required to pay private mortgage insurance (PMI). This is an insurance policy that protects the lender in case you default on your loan.

FIVE: Interest rates matter

Mortgage rates can fluctuate, so it's important to keep an eye on them when you're shopping for a home loan. You may want to find a lender who can lock in a low interest rate for you.

Loans with a variable interest rate

Some loans have a variable interest rate, which means the interest rate can change over time. These loans typically start with a lower interest rate than fixed-rate loans, but they can increase if market rates go up.

Avoid an adjustable-rate mortgage

An adjustable-rate mortgage (ARM) is a type of loan that has a variable interest rate. The interest rate on an ARM can change over time, and it typically starts with a lower interest rate than fixed-rate loans. However, if market rates go up, your interest rate will increase as well.

SIX: Don't trust "too good to be true" offers

If something seems too good to be true, it often is. The same goes for ads you see about killer interest rates and other flashy mortgage lender deals.

Beware the allure of the online lender

Buyer beware! There are many reputable online lenders, but there are also some that are not so reputable. If it's not a known company or financial institution, best to keep moving and find a more reputable mortgage lender.

Use a reputable mortgage company

When you're choosing a mortgage lender, it's important to use a reputable one. Local lenders like Texas United Mortgage also tend to know their specific markets best and can help you get great rates and move quickly to close your loan.

SEVEN: Listen to friends and family

If you know someone who has recently bought a home, ask them who they used for their mortgage lender. They may have some great recommendations.

Ask real estate agents for recommendations

If you're working with a real estate agent, they may also have some good recommendations for mortgage lenders in your area.

Read reviews

When you're choosing a mortgage lender, be sure to read online reviews. This will help you weed out the good from the bad.

Takeaways on choosing a great mortgage lender in Houston

When you're choosing a mortgage lender, there's a lot to keep in mind. Hopefully, these 7 tips will help set you at ease as you begin your home-buying journey. Or if you're feeling ready to get re-approved, reach out to our team at Texas United Mortgage today! We are happy to help.

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