Three Tips to Select a Mortgage Lender
The process for selecting real estate agents and mortgage lenders is often similar, with the main difference being your search will turn up several non-local lenders that may be a good fit for your particular lending needs. Whatever your methodology is, these tips to select a mortgage lender can make the process seem less scary and non-evasive.
It is critical that you have a local real estate agent who knows street-level and regional pricing dynamics in your target neighborhoods intimately. But since mortgage lenders can lend anywhere and mortgage rates and fees are generally the same nationally, non-local lenders claim they can handle your transaction as well as local lenders.
To examine which lender will work best for you, look at 3 of the top ways consumers find their mortgage lenders, according to a recent survey by the Consumer Financial Protection Bureau (CFPB) – the Federal agency that regulates the mortgage industry.
Finding a Lender Online
This method makes it easy to view real-time rate quotes with detailed line-item fees without the pressure of a face-to-face meeting. The detail you will get from the quotes is similar to what you will typically find in a Good Faith Estimate.
Searching online also affords you the opportunity to read extensive lender reviews before connecting with a lender, so you feel comfortable before providing any documentation. Shopping online is the fastest way to ensure you are getting the best rates and fees while simultaneously connecting with a local lender.
When you have narrowed your search, ensure you interview the prospective lenders to find out more about their experience, specific rates for your situation, and their qualifications. If you want to be even more thorough, ask for references and follow-up with the names they provide to find out more details about each lender.
Also, a quick check on nmlsconsumeraccess.org will let you know if they are registered in your state. While this may seem extreme, it only takes a few minutes to determine if your prospective mortgage lender has the authority to assist with your real estate buying needs.
Lender Referrals from Real Estate Pros
Though it is always best to get pre-approved by a lender before you start home shopping, it is not uncommon for people to connect with a local real estate agent or builder to learn the market before shopping for lenders. In these cases, the agent or builder will often refer you to a lender. If you have established a good rapport with your agent or builder, he or she becomes one of the most reliable resources to introduce you to a great lender.
Credible agents and builders always maintain strong lender relationships in their local areas. They will likely advocate for a local lender because part of the lender’s closing process is a home appraisal, and the lender must work closely with a local appraiser to avoid appraisal/loan approval problems. If the lender’s appraiser does not understand the neighborhood you are buying in, it can lead to trouble at closing.
Referrals can also be a good way to find the best mortgage lender and it does not hurt to ask real estate professionals if they can recommend any lenders they have used. You can ask them about their overall experience with the mortgage lender and if they were responsible, trustworthy and easy to deal with.
Experienced agents should be able to refer you to someone they have worked with in the past. Just make sure you take all your other options into consideration before making a commitment and know what mortgage documents you will need and when they will be required.
Finding Lenders Through Personal Connections
This is one of the simplest ways to find a strong lender. You can be sure your family, friends or colleagues will have strong opinions about their lender, whether good or bad. So ask them to give you their recommendations so you can interview those lenders.
Friends will give you specific and honest examples of their lender’s rates and fees, whether the lender’s rates and fees were competitive and whether local expertise was helpful throughout the closing process. This information can be invaluable to help you choose the right lender for your situation!
If a lender has gone above and beyond or below the watermark you can bet friends and family members will tell you exactly what they think. Sometimes this can make all the difference when considering whether a particular lender is a good option for you to consider.
Pair all three methods above for thorough lender research before making your selection. By doing so, you can quickly ensure a local lender’s rates and fees are competitive on a national level and feel confident you are in the best hands to make one of the largest purchases of your life.
With likely the largest purchase in your life hanging in the balance, spending time doing your research will pay off in the long run. If you have done your homework well, the result should be a quality lender who does their best to help you close on your home with minimal disruptions, on-time, and an overall positive home buying experience.
Additional Lender Resources
When & Why You Need a Mortgage Pre–Approval via the Rochester Real Estate Blog
Shopping For a Mortgage by the Federal Reserve
Outstanding Mortgage Information courtesy of Pearltrees
10 Questions to Ask Loan Officers from Bill Gassett
Top Mortgage Tips by 34 Experts via Joe Samson
25 Tips From Real Estate & Mortgage Pros by Tim Lucas
USDA Mortgage Facts from Luke Skar
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