Lender's Role
Some buyers can purchase in cash, but for most buyers, a Lender is needed to be the source of funds for the transaction. Near the beginning of your home shopping process, it is important to establish a relationship with a lender. It is important to search for a lender who is willing to act as a financial counselor. He/she should be able and willing to analyze your financial situation and offer you a mortgage tailored to your particular needs, keeping in mind interest rates, cash requirements and monthly payments.
Some of the key factors in choosing your lender are:
- Interest Rates
- Points
- Types of Mortgages (length of terms, fixed rates, etc.)
As with a broker, much of what the lender does relating to the closing happens long before the closing date comes.
The lender is primarily interested in protecting its interest in the property. In order to do that, lenders typically require at the very least a title insurance policy and a homeowner's insurance policy. Depending on the individual circumstances, a lender might also ask for a survey and inspections.
Lenders can also require the borrower to maintain an escrow account for property taxes and insurance so that the lender is sure money will be available for the payments. These are referred to as reserves. Depending on the type of loan being issued, the lender may also require private mortgage insurance.
