There are many ways to approach the process of selecting a lender for your home mortgage. Some people choose to make impulsive decisions, calling the first lender they find. Other people may be overly thorough by starting an application with several lenders during the buying process. It’s easy to see that calling a lender without researching is a bad idea, and you probably don’t have the time to work with multiple lenders at once. So what are some wise and efficient ways to select a lender?
Five Things to Consider When Selecting a Lender
Below is a list of things you should take into consideration when deciding on a lender for you new home loan. Whether you’re looking to refinance or buy a new home, these recommendations will help you.
Nothing of Value is Free
If you use the internet to find a mortgage broker, you’ll find a plethora of lenders touting rates well below industry averages, with no fees, and free services like appraisals or credit reports. While these seem very attractive, you must be careful. Often times the rates/terms being promoted are for extreme situations. Often the offer is for an Adjustable Rate Mortgages (ARMs) for the most ideal borrower, and unfortunately very few borrowers can qualify.
Be cautious when investigating the companies that make these claims, and remember the saying, “if it seems too good to be true, it probably is.”
Testimonials and Online Presence
One excellent way to validate a lenders claims is to check customer feedback. This has become an ever easier task with internet rating sites like Yelp and Google Local. Satisfied customers are happy to share their stories and disgruntled customers are eager to warn others away from lenders with poor customer service. Learning from other’s experiences can save you a lot of trouble down the road.
In addition to looking for reviews, can you do a online search and find the company? Try typing the lender’s name into a Google or Bing search. Do you see results from the Better Business Bureau (BBB), Yelp, and social media sites? Or does nothing of value show up? Having an online presence is a good indicator of a lender that is not trying to hide something.
The Man Behind the Curtain
Many mortgage experts like to think of big brands like Well’s Fargo, Veterans United, Chase, and USAA as the “man behind the curtain.” The big name company is the curtain and a lot of borrowers take comfort in that big name. For them the name offers some type of protection. But the fact of the matter is, your loan is only as safe as the person, not the company working on it. Behind the curtain of these big brands is a person, and while they may have a business card that says Wells Fargo, that doesn’t mean they have more experience or knowledge than your local mortgage broker.
When considering a lender, don’t get caught up in the company, as much as with the person who will be handling your loan. Your goal should be to find the loan officer that will work hard for you, is honest, and is easy to reach.
When you call the lender, are you asked to push a number to get to a department, or does a live person answer the phone? Often in the loan process you need to quickly communicate with your loan officer, and it is vital that you are able to reach him or her as soon as possible. Being able to communicate with your loan officer in a timely manner can mean the difference between getting an approved offer on a home or it going to someone else.
Having a local lender should be viewed as more than just a luxury. A local lender general has these added benefits…
1. Knows and has worked with the local appraisers
2. Easier to meet with in person
3. Has a network of local realtors and other mortgage professionals
4. Is familiar with the housing market in your area
When it comes to selecting a lender you can trust, following the five guidelines listed above can really be the difference in having a pleasant home buying experience or having a stressful one.