Shopping for a Mortgage – A “How-To” Guide
When you’re ready to invest in a home, you’ll get the same piece of advice from just about everyone… “Make sure you shop around for your mortgage.” It’s a smart recommendation, but many potential homebuyers don’t know where to begin. Unless you’ve comparison-shopped the mortgage market before, figuring out how to find the best lender can feel overwhelming.
At Ernest Homes, we want every homebuyer to feel confident and prepared. We’ve put together a simple, step-by-step guide to help you evaluate your options and choose the mortgage that best fits your needs.
- Decide which type of mortgage is best for you.
There are three general types of mortgages: fixed-rate, adjustable-rate, and balloon loans.
A fixed-rate mortgage keeps one interest rate for the life of the loan—ideal for buyers who prefer predictable monthly payments.
An adjustable-rate mortgage (ARM) often starts with a lower rate, but it can fluctuate based on market conditions. If you maintain an emergency fund and can handle occasional rate increases, this may be a good choice.
A balloon loan offers lower monthly payments upfront, with one larger payment at the end. This is a fit for buyers who know they will sell or relocate within a shorter timeframe.
- Choose the length of the mortgage.
Terms typically include 15, 20, 25, or 30 years. Shorter terms mean higher monthly payments but major interest savings over time. Longer terms reduce monthly costs but extend the duration of the loan. Choose the term that aligns with your financial goals and comfort level.
- Make your point.
If you plan to stay in your home for many years, consider buying down your interest rate by paying points. One point equals one percent of your loan amount, and this upfront investment can lower your overall borrowing cost. Points can often be rolled into the loan if preferred.
- Check your credit.
Your credit score is a major part of the mortgage process. The higher your FICO score, the stronger your negotiating position. If you need to boost your score first, review our tips on credit repair.
- Start close to home.
Begin by checking rates with the financial institutions where you already have accounts. Banks, credit unions, and savings and loan institutions often offer competitive programs or customer benefits.
- Turn to the experts.
Mortgage brokers compare rates from multiple lenders, helping you quickly identify competitive options. Ask for recommendations from friends, coworkers, or neighbors who recently purchased a home, and check online reviews to ensure the broker has a strong reputation.
- Work with your builder.
When purchasing new construction, always ask about preferred lenders. Builders often partner with trusted lenders who streamline the loan process and may offer special incentives. At Ernest Homes, we collaborate with experienced lending professionals committed to helping buyers finance their new homes.
If you have financing questions, our preferred lending partners are here to help:
- Tracey Craven – Renasant Bank
912-660-9818 - Tim Hazelman – Colony Bank
912-856-9062 - Brad Bixler – Ameris Bank
678-549-4460
- Follow up for best results.
After securing your mortgage, review your closing costs carefully. These fees typically range from 3% to 6% of your loan amount and can vary widely from lender to lender. Credit unions often offer more favorable fee structures.
You’ll also receive a good faith estimate with an itemized breakdown of all closing expenses. Review it thoroughly so you know exactly where your money is going.
With a clear step-by-step strategy, you can confidently choose the mortgage that best fits your needs while reducing stress during the homebuying journey. If you have questions about shopping for a mortgage, reach out anytime. Email our team or call 912-660-9673—we’re here to help!
