How to Pick a Mortgage Lender
Choosing the right lender is critical to a successful home purchase because a mortgage lender can help you get the lowest rate and best terms possible. But choosing a mortgage lender should be based on more than just finding the lowest rates. You also have to find a lender who can lock in your interest rate fast and close the loan on time while providing good customer service.
Prior to looking for a lender, decide exactly what type of mortgage you’re going to get, such as fixed-rate mortgage, adjustable-rate mortgage (ARM), 1-yr. treasury ARM, Federal Housing Administration (FHA) loan, or Veteran Administration Loan. Not all lenders work with all types of loans, so it’ll be easier to narrow down your selection once you determine what type of loan you’re getting.
Brokers vs. Lenders
One decision you’ll need to make when choosing a lender is whether to work with a mortgage lender or broker. Although you can get a mortgage loan from either a broker or a lender, a lender is an official at the lending institution originating the loan while a mortgage broker is a middleman that shops around to find you loans from various lenders. You may want to compare loan options from both lenders and brokers before making a decision.
Where to Find Lenders
Start out by asking your friends, family, and co-workers for referrals. You can also ask trusted real estate agents or tax advisers for referrals. However, never blindly accept someone’s recommendation. Ask them specifically why they recommend a particular lender. You could also check with your bank or credit union to see what mortgage loan programs they offer.
Meet with at least two or three lenders to ensure that you find the right match. Any good lender should be able to qualify you for a loan, give you advice about improving your credit, and ask questions about your
financial goals and long-term homeownership plans. You should also check a lender’s track record and reputation for getting loans to completion.
Ask the Right Questions
It’s not necessary to apply for a loan to get answers to your questions. Simply call various lenders to get more information about their loan programs. If you find that a lender is difficult to reach or reluctant to answer your questions, perhaps you wouldn’t want to work with that lender. Some things you might want to ask a lender include how long the loan process will take, what loan programs the lender offers, how often you’ll be in touch with one another, and whether the lender can provide you with a Good Faith Estimate right away. Look for a lender who helps you set expectations and explains everything in language that you understand.
A mortgage lender should be able to present you with a wide selection of loan programs and pricing. All lenders have their own way of doing things, but most provide some kind of written statement that compares different loan programs. To make the comparison process easier, only ask about the loans’ interest rates, points, and lender fees. There’s no need to ask about insurance and taxes, which don’t vary much from one lender to another. You can always ask about that later.
Finding the right lender is a process you have control over. Do your homework and learn the basics of the mortgage loan process, so you can find a lender more easily. Be sure to speak with several lenders and ask the right questions, so you can find a lender who will help you set goals and secure a loan that’s appropriate for your needs.
Rockford Homes is one of the leading Columbus home builders. Although we do not provide loans or hold financial stake in any mortgage company, we partner with some of the best lenders in the business. Please contact us for more information.