Choosing Your Lender
When you buy a home, one of your primary concerns will be finding a lender who can provide the financing you need. So how should you shop for a lender? Calling around and asking for interest rate quotes is NOT the best way to select a lender WHY? Because:
Interest rates can change daily, so a quote may not be reality tomorrow
Rates quoted over the phone may not be “locked” prices and the lender wants to get you in the door. This means that the rates would be subject to change until the day your loan is funded instead of being pre-determined for a specific amount of time.
The lender knows nothing about your situation or needs, and the rate they quote you may be for a program you don’t qualify for.
You won’t know what the lender has to offer you.
Competitive rates are important, but when you consider the fact that most lenders get their money from the same sources (and therefore have essentially the same rates to offer), you must look at some other factors before choosing a lender. You need a lender who works with you and your real estate agent as a team and has the same goal – to get your loan closed in a timely and professional manner
Some of the questions to ask a lender should include:
Are you a mortgage banker/direct lender? A direct lender is one who not only originates loans, but also underwrites, approves, funds and services them. A mortgage banker has in-house money to lend and therefore has the most control over the loan process.
Are they a mortgage broker? They originate loans but do not actually lend the money. The broker will submit the package to an outside source that underwrites and funds the loan…so they can send the loan to many different lenders and offer a wide variety of loan programs but do not have as much control over underwriting and funding.
How long has the company been in business? Lenders come and go. Make sure that the company you are dealing with has been around for a while.
What is the lender’s reputation within the real estate community? Ask your agent if they are familiar with the lender, A local lender with a good reputation within the industry will also be of benefit when presenting an offer.
Do they lock in their interest rates? For how long?
Interest rates can change daily, so a quote may not be reality tomorrow
Rates quoted over the phone may not be “locked” prices and the lender wants to get you in the door. This means that the rates would be subject to change until the day your loan is funded instead of being pre-determined for a specific amount of time.
The lender knows nothing about your situation or needs, and the rate they quote you may be for a program you don’t qualify for.
You won’t know what the lender has to offer you.
Are you a mortgage banker/direct lender? A direct lender is one who not only originates loans, but also underwrites, approves, funds and services them. A mortgage banker has in-house money to lend and therefore has the most control over the loan process.
Are they a mortgage broker? They originate loans but do not actually lend the money. The broker will submit the package to an outside source that underwrites and funds the loan…so they can send the loan to many different lenders and offer a wide variety of loan programs but do not have as much control over underwriting and funding.
How long has the company been in business? Lenders come and go. Make sure that the company you are dealing with has been around for a while.
What is the lender’s reputation within the real estate community? Ask your agent if they are familiar with the lender, A local lender with a good reputation within the industry will also be of benefit when presenting an offer.
Do they lock in their interest rates? For how long?
