Tips For Choosing A Mortgage Lender

Finding the best lender for you...

When it comes time to apply for a mortgage, you may be confused as to where to begin. A home is most people's most significant investment, and the thought of carrying a large amount of debt can be stressful. To keep the process as seamless as possible, it makes sense to choose a trustworthy and competent mortgage lender. How to choose the right one? Follow the tips below to help make you with your choice.

Know what type of lender you are looking for

Mortgages are available at your local bank, through national lenders, and through mortgage brokers. To make the best choice for you it is important to understand the difference between each type of lender. When applying for a loan, many people begin their search at their local bank. A bank where you already hold accounts is often a good choice, you know the people, they know you, and by having more than one account at a bank, you may save money on fees and closing costs. There are drawbacks to working with your local bank as well. Small banks may not have as much freedom with lending practices, and may not be able to offer a loan to someone with less than excellent credit. They may also have trouble competing with larger institutions in regards to interest rates and closing costs.

National banks have an advantage in that they often offer lower rates as well as more variety of loans. The disadvantage is that you are not likely to work closely with your loan officer, and are "just a number". Many of your dealings may be via email or telephone messages, with few, if any, face to face meetings. Mortgage brokers are a "go between". They work with a variety of lenders. Their goal is to find the best loan package for your circumstance, whether it is of a first time home buyer, problem credit, or refinancing option. If you choose to go with a mortgage broker, it is important to ask how they will be paid for their work, so there are no surprises when closing day arrives.

Reputation is important

If you are going to trust a stranger to help you make the most important financial decision of your life, it is important to make the right choice. Once you have narrowed down your choice of lenders to a few, ask acquaintances who have recently purchased homes who they recommend. Who they recommend, or who they do not recommend, can give you some insight into who would be a good choice for you. While everyone is different, and has different expectations, if you hear complaints about a particular lender that you were considering, it makes sense to follow up on those concerns. Before finalizing your choice in lenders, make a few more inquiries. Particularly in the case of a national lender or a mortgage broker, it is important to make sure that they are licensed to do business in the state where you are located. Once you have confirmed this, typically through your state's banking oversight division of state government or the secretary of state's office, you can move ahead in your inquiry. Next contact both the attorney general for your state as well as your state's Better Business Bureau. Complaints filed through these two agencies should be taken seriously before moving ahead with a lender.

Communication and responsiveness

Once you have narrowed down your choice in mortgage lenders, finalize the deal by choosing someone that you are comfortable with. The most well respected mortgage lender on the planet will not do you any good if they do not return your phone call or treat your questions as irrelevant. It is not unreasonable to expect your questions to be answered immediately, and calls and emails to be returned the same day. An important consideration is that if the mortgage lender is less than responsive or less than forthcoming when trying to win your business, what can you expect once they have your business?

Forthcoming

All mortgage lenders should be willing to provide you with a good faith estimate. This is an estimate on the amount of money that it will cost to close your loan. The good faith estimate takes into consideration appraisal fees, any points you may pay to lower the interest rate, title insurance, and other fees that are included in the cost of the loan. If the mortgage lender wants a commitment from you before providing you with a good faith estimate, it is time to look around for another lender.

Personality

It is perfectly okay to admit that you do not hit it off with someone. Even if family and friends have had excellent experience with a lender, if they make you uncomfortable, seem unwilling to answer your questions, or you just generally do not get along, there is no reason to feel obligated to choose them as your lender. The mortgage relationship is a long one, and you should choose someone who you get along well with.

About Author:
Mel Hansen is a freelance writer who writes about topics pertaining to the mortgage industry.