How To Choose A Lender
You’ve decided you’re ready to buy a new home. The first thing you need to do is find a lender. Remember our last blog when we discussed why you should find a lender before a real estate agent?
But how on earth do you go about finding the right lender for you? It’s likely the largest purchase of your life – you don’t want to leave that job to just anyone.
The government recently implemented rules that encourage homebuyers to shop around for their mortgage lender. When shopping for a new vehicle, you usually don’t just go to one place, you shop around for multiple options. It should be the same with your mortgage.
We’ve compiled a list of questions to ask various lenders while shopping around. This list is by no means exhaustive and some questions may not make sense depending on your situation.
What is your fee?
Because you don’t pay your lender their fee directly, it can be easy to overlook. Instead of paying them when you first meet with them, your lender’s fee is included into the amount you bring to closing which is disclosed on the initial Loan Estimate. While there isn’t as much variation in fees as there used to be, the fees can still vary.
Even if you aren’t terribly concerned with the monetary amount, this is still a good question to ask your potential lender. Listen to the way they explain it to you and assess how patient they are. You’ll likely be asking a lot of questions throughout the process so you want someone who is happy explain everything to you.
How long have you been doing this?
Focus on their experience in the industry as a whole and how many loans they generally handle. After gathering that information, ask about their current position and past couple of positions they’ve held. Like any professional position, it generally isn’t a good sign if a loan officer is jumping around from place to place.
Are you experienced in non-conventional loans?
This question is extremely important to ask, especially if you’re considering a non-conventional loan like an FHA, VA, or USDA loan. In fact, not all lenders do all types of loans.
Do you hold onto the loans post-closing or sell them?
After closing, some lenders will sell your loans, meaning you will actually be paying a different company for the duration of your mortgage. There isn’t a great advantage for you either way, it’s just important to know who you will be dealing with in the future.
While these questions are all great, what it really comes down to is your gut instinct. Do you trust the lender? Do you feel comfortable with them? If you answered no to either of those questions, you probably shouldn’t go with them.
There are so many different options when it comes to choosing a lender. Lenders come in all sizes and each has their own advantage. For example, if you’re looking for someone to really get to know you and your financial situation, a smaller lender may be the best option. Often times, smaller lenders are the ones who work around the clock to get your loan through, rather than just putting in their eight hours five days a week.
Whatever you decide, it has to be the right decision for your personal situation – there is no one mortgage that’s perfect for everyone.