Tips for Choosing a Mortgage Lender
Choosing a mortgage lender for your home purchase is a big and complicated decision. In today’s real estate climate, there’s an overwhelming number of mortgage lenders out there just ready to pounce on your interests, eager to accept your loan application. But, just because your application is accepted by a lender doesn’t necessarily mean that it is the right deal for you.
Remember, in going through this process, you’re likely going to be stuck with this mortgage for years to come. So, it’s important to make sure that you shop around and choose the best mortgage lender for your specific needs, interests, and goals.
Now, before we go any further, let’s quickly clarify that a mortgage lender is not the same as a mortgage broker. There is a slight difference between the two, though both provide access to home loans. In the most basic sense, a mortgage lender is a financial institution that makes loans directly to the borrower. A mortgage broker connects borrowers to lenders and loan products, but they don’t actually lend the money.
When working with a mortgage lender to obtain a home loan, there are certain tips that you’re going to want to keep in mind as you choose the right one. Here’s what you should do:
- Shop Around – In choosing the right mortgage lender to work with, the key is to shop around. We suggest talking to at least three lenders in order to get a sense of their persona, their interest rates and all of the specifics relating to the loan that they can provide for you. If you’re not sure where to start, ask your agent for recommendations. But, remember to do your own research, too.
- Ask about the company’s specific experience – Every home purchase is unique and therefore each loan is unique. So, be sure to ask each potential lender about their experience relating to certain situations similar to the one that you’re facing.
- Always look at a lender’s reviews – Reviews, regardless of industry really, are an incredibly useful tool that you have readily available at your fingertips. So, use them. They can help you narrow down your choices and choose a lender to work with, as they can give you valuable insight into what it would be like to work with a particular person. Zillow, for example, has the largest online lender directory with thousands of reviews. Through their site, you can search the directory for your potential candidates.
- Make note of first impressions – From initial contact to that first in-person meeting, take note of absolutely everything. Remember, you’ll be working closely with your lender, so impressions matter. Note things like whether or not they were prompt to respond to your outreach, whether they communicate in a friendly, courteous and professional manner, whether they honored their advertised quote, etc. It’s also important to make certain that whoever you’re going to work with is willing to explain things in order to educate you about different choices and the process.
- Compare loan estimates – Finally, ask each potential lender for a Loan Estimate. This is a form required by law that can help you easily compare different loans from different lenders. The estimates will show you every detail of your loan, from interest rates to fees, to monthly payments and more.
The mortgage lending business is extremely competitive, and mortgage lenders come in all forms of experience, training, and affiliation. So, before you commit to one, be sure to do your research to find the one that will suit your specific needs and home ownership goals.