3 Things You Should Know Before You Switch Mortgage Lenders

Are you considering switching or trading mortgage lenders? You're not alone. Many homeowners decide to refinance their existing mortgage using a different mortgage lender. 

Often, switching to a new mortgage lender means lower mortgage rates and more favorable loan terms.

Alternately, perhaps you selected a lender and applied for a mortgage loan, only to find out your application was denied. 

If your mortgage application is denied, your dream of homeownership isn't over. Depending on the reason for denial, it may make sense to apply with another lender.

If approval seems promising, but you aren't happy with the terms being offered, this may be another reason to consider working with a different mortgage lender. You might find that even though one lender won't approve you at the rate you desire, it's possible another will.

Carefully choosing a mortgage lender saves you time, effort and most importantly money.

Here are three valuable tips that can help improve the experience if you decide to switch mortgage lenders.
 

1. Make sure your financial situation is the best it can be.

The main reason for mortgage denial is not the lender, but the applicant's financial situation or credit history. If this happened to you, correct the errors that appear on any of your three credit reports before completing another mortgage application. Doing this may improve your credit score and make you a better-qualified mortgage loan applicant.

2. Never seem desperate.

Appearing desperate for a mortgage always puts you at a disadvantage. When lenders see desperation, some may be inclined to charge higher interest rates or impose higher fees because they think you'll agree to their terms, no matter what the cost to you. Let lenders know you're shopping around and will choose to work with the lender offering the most favorable terms. Remember, plenty of mortgage lenders are out there and most mortgage terms are negotiable.

3. Choose a reputable lender

Good lenders are out there but bad ones are out there, too. Research can help you figure out the difference. Something else that will help is getting referrals and recommendations from trusted friends and family. Failure to carefully choose your lender could put you at higher risk of mortgage fraud, exorbitant mortgage fees, not securing the lowest mort gage rates and more. You don't need these kinds of problems.

Gretchen Wegrich

Gretchen Wegrich is an editor at Lender411. She specializes in mortgage basics, personal finance and green living. She graduated with a bachelor's degree in writing from University of California, San Diego and previously worked at the Santa Cruz Sentinel. Contact her at gretchen@lender411com.