Choosing the Right Home Loan Lender For You

Many homeowners choose to apply for a home equity loan or a home equity line of credit for many reasons, such as paying for home improvements, college expenses or wedding costs. Like a mortgage, you'll be looking for a lender. Finding the lender that is right for you may seem like a tedious task, but doing simple research can help you save a considerable amount of money and grief. Here are a few tips for finding a lender.

Shop Around

It's nearly impossible to emphasize how important it is to shop around for a lender. Shopping around can help you gain a better understanding of the loan process. According to the professionals at Do It Yourself, there are several types of lenders who provide home equity loans, like thrift institutions, commercial banks, mortgage companies and credit unions, so you have a variety of options to choose from.

If you don't have the time to shop around for a lender, those at Do It Yourself say you can hire a mortgage broker to find a lender for you. It can be beneficial going through a broker because they have the opportunity to contact several different lenders. However, the professionals at Do It Yourself caution homeowners who choose to use a broker, because a broker is not required to find the best deal for you unless it's in the contract. They recommend shopping around for a broker just as you would for a lender.

Ask Questions

While shopping around for a lender or a broker, you should make a list of questions you would like to ask each professional you meet with. Having a set of questions prepared can help you keep the meeting on track and remind you what specific concerns you need to address. It can also make it easier to judge the competing lenders, because you can see how each of them compares on the basic terms.

Here are several key questions to discuss with each company:

• What are the loan terms? Get the professional to write them down, so you don't have to write them down or remember them.
• What about your credit? If you have bad credit, it may be more difficult to find a lender. However, there are lenders who are willing to work around it.
• What is the lender's reputation? Ross says to look for recent mergers or restructurings, because they can be a sign of potential problems.
• How much is it going to cost me? Ask about the cost of closing fees when you ask about your monthly payments.
• How long is it going to take? Usually, it should take about a month. If it will take longer, ask why.
• How knowledgeable is the staff? A knowledgeable staff is important if you should have any questions during the application process and during the term of your loan.
• Is there an early penalty fee? Some companies may charge the borrower a penalty fee for paying off their loan early.

Hopefully, these tips can help you find a professional who can make the loan process a pleasurable one.