Choosing a Lender
With so many banks and lenders available in nearly every part of the country, it may seem time consuming to find the right lender. It is common for home buyers to choose the lender with the lowest interest rate, but a home buyer should also be aware of a lender's history of customer service. Always ask around and check with the Better Business Bureau www.bbb.org and other services such as www.ripoffreport.com to see other people's experiences with a specific lender or mortgage broker.
It is extremely valuable to find a good mortgage broker for your real estate team to help you with the loan process. A mortgage broker's best asset is their knowledge of different loan products lenders are offering and their advice based on your financial profile and goals. One of the best ways to find a good mortgage broker is to ask friends, family, colleagues and real estate agents for recommendations. If you wish to speak with a bank's loan officer to get quotes on interest rates, do not let them convince you to put in an application. They should be able to give you quotes without having to run a credit check. Having several credit checks by lenders will lower your credit score. Recommendations from people who have actually used the mortgage broker or loan officer they are referring can be extremely valuable.
ALWAYS be careful with who you are working with as your sensitive information can be solicited or sold to 3rd parties. Use the Mortgage Broker Evaluation Form in the Free Tools section to help with your selection process. Below are the differences between working with a mortgage broker and directly with a bank or lender
Mortgage Broker- Can help find the best loan possible with their network of lenders based on home buyer's financial profile and goals.
- Only one credit check needed to obtain quotes from mortgage broker's network of lenders. Second credit check will be done with the selected lender of choice. This is a better way than independently applying for mortgages with different lenders, each conducting a credit check, which can lower an individual's credit score.
- Mortgage brokers can usually provide a new or updated pre-approval rather quickly to allow home buyer to start submitting offers on homes of interest.
- Although fees paid to mortgage brokers are usually passed on to the buyer in the form of a point (i.e. 1% of the loan), mortgage brokers are usually able to obtain a lower interest rate from the lender than a home buyer can.
- Easy to find and speak with someone by just walking into a local bank and meeting with their loan officer who will help the home buyer find a suitable loan product that the bank offers. Although meeting with a loan officer in-person may be preferred buy some home buyers, the home buyer is limited to that particular bank's product offering.
- Only one credit check needed to obtain pre-approval letter and for throughout the mortgage process if home buyer does not put in an application or obtain a pre-approval letter from other lenders.
