How to Choose a Mortgage Lender
You’ve checked and re-checked your budget. You’ve crunched the numbers and know how much house you can afford. You know the difference between interest rate and annual percentage rate (APR). You’re ready to buy a house.
But are you ready to choose your lender? Don’t take your lender choice for granted. Here are some things to consider.
There are lots of mortgage companies out there. Just because you’ve never heard of them doesn’t mean they aren’t reliable. However, if you are considering a smaller company, do your homework. How long have they been in business? Are they a member of the Better Business Bureau or the local Chamber of Commerce? If you are considering a larger “brand name” lender, chances are you know someone who has worked with them. Canvas your friends and family: what were their experiences with this lender?
You’re going to be working closely with this company for a while, from application to closing, and beyond. It’s a complex process – you’re going to want to feel comfortable that your lender won’t drop the ball along the way. Once you’ve made contact with a lender, what was your first impression? Were you able to get someone on the phone right away? Did they answer your questions thoroughly and without industry jargon? Did you feel pressured to submit an application before you were ready? At this stage, trust your gut.
Product Selection and Price
Most mortgage companies offer the most popular mortgage products: a 30-year fixed rate and a selection of adjustable-rate mortgages. But product selection is still important. Ask your loan officer how he or she will determine a loan that best fits your needs and circumstances. Once you get a rate quote, it’s a good idea to compare it to your other offers. And once you’ve chosen your lender and submitted an application, pay close attention to the Good Faith Estimate – if it looks incomplete or you find the fees seem very high, it may be a red flag. See our related article on How to Read a Good Faith Estimate.
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