Selecting a mortgage lender
It sounds logical to look for the lowest mortgage rate when you’re ready to buy a home. But your decision needs be based on more than just the lowest rate. Buying a home is one of the biggest financial decisions you will ever make. It’s important to find someone you trust and who will focus on getting the best financing for your situation so you can buy the home of your dreams.
Based on our many years of experience, we have a few tips to help you choose a lender:
Do you want to work with a small or large financial institution?
You might be more comfortable with a smaller bank or credit union if you like more personal service and a lender who knows you by name. Conversely, if the lowest possible rate is more important to you, a larger lender might be your best route. Mortgage brokers are another option; they earn their fees when they arrange deals between buyers and lenders. Brokers may save you time by finding a lender for you. Just make sure they connect you with a lender where you get the best mortgage for you and not higher fees for them. Do your research, ask questions and ask for references.
Ask for recommendations.
Ask professionals who deal regularly with mortgage lenders, such as your realtor, financial advisor, accountant and attorney. Friends and family may be good resources. Get names of the lending professional(s) they recommend, not just the name of the financial institution. Your current bank or credit union can be a good place to start if you’ve been satisfied with them. Ask if they offer incentives to existing customers.
Research and interview.
Whoever you start with, it’s smart to find a lender who’ll focus on your best interests. Sit down with two or three mortgage professionals and ask questions about their experience and qualifications. It isn’t even necessary to apply for a loan yet. Rate them based on this simple check list:
- Do they take time to explain types of mortgages and in terms you can understand?
- Do they explain everything about timing and fees?
- Do they have an interest in your financial goals and long-term plans?
- Do you feel they’re rushing you into making a decision?
- Do they offer advice if your credit is poor? A good lender will not only assess how mortgage payments fit into your budget but also suggest ways to remedy a low credit score.
- Do they tell you how long loan approval takes, what to expect in closing costs, what will happen if the appraisal comes in too low or last-minute problems cause a rate lock to expire before closing?
- Is it their practice to later ‘sell’ your loan? If you value customer service, you may want to choose a lender that does not sell your loan buy keeps it locally for the life of the loan.
- Were they responsive to all of your concerns and questions?
Compare, contrast and decide.
From rates, points and fees to timing, servicing and how you related to the loan officer, compare everyone you spoke with. Which mortgage is the best match with your needs? How do the fees, points and annual percentage rates (APR) compare? Review your information to ensure you have noted every possible cost, and double-check your math. If you were turned down by a lender, ask why so you can remedy any issues.
If you’ve done your homework, it should be easy to decide on the best lending institution and mortgage professional.