While the Consumer Financial Protection Bureau require all lenders to follow specific guidelines when it comes to pricing, rates, and other factors, that does not mean that all lenders are equal. While it is true that some may be able to give borrowers a slightly better rate, that is not the only difference between them. Here are a few different things borrowers should look into before selecting a lender:
1. Does the lender work with Freddie Mac and Fannie Mae? This is especially important for those with complicated income situations such as freelancers because it can determine whether the lender can fund the mortgage.
2. What are the lender’s guidelines for approval? Some lenders offer FHA loans with lower credit scores, while others may be willing to make loans to those who have a debt-to-income ratio higher than the standard 43 percent. It all depends on what kinds of risks the lender is willing to take on. Those that are more lenient may not always be the best option, however, so consumers should not use this as their only criteria.
3. Does the lender have any investor overlays? These overlays are additional restrictions the lender may have in addition to what Freddie Mac and Fannie Mae require. One example is paying off a debt. Some lenders may allow consumers to do so in order to qualify for a loan, while others may not.
Consumers should take these three factors into account as well as the length of the loan, the interest rate, and other information when selecting a lender.
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