You’ve decided you’re ready to buy a new home. The first step is choosing a mortgage lender. 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 implemented rules that encourage home buyers 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 while choosing a mortgage lender. This list is by no means exhaustive and some questions may not make sense depending on your situation. In addition to asking each lender you meet with the following questions, we recommend also evaluating them on the following criteria:
- Compare rates and fees.
- Look through testimonials and reviews.
- Ask a trusted real estate agent about the lenders’ professional reputations.
- Evaluate communication levels.
Questions to ask when choosing a mortgage lender:
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 built into the interest rate and 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 while choosing a mortgage 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 to 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 changing jobs often.
How involved are you in the industry?
There are many different professions in the mortgage industry. To complete just one loan, over seven individuals have to work together, including the lender, real estate agent, loan processor, mortgage underwriter, appraiser, home inspector, and title closer. The process involves a high level of communication to run smoothly and often communication is better when everyone knows each other.
Networking is an important part of any industry, but especially the mortgage industry. If a lender takes the time to get to know the people they’re working with, they will likely have a higher level of communication with them and, ultimately, be able to provide better customer service to you.
Are you registered or licensed?
Like many professions, there are different types of accreditations for loan officers. While both registered and licensed loan officers are able to originate loans, licensed loan officers are required to take continuing education classes each year to stay up to date on industry best practices and take tests on the material covered.
Are you experienced in non-conventional loans?
This question is extremely important to ask when choosing a mortgage lender. It is especially important if you’re considering a non-conventional loan like an FHA, VA, or USDA loan. 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, but it’s important to know who you will be dealing with in the future.
There are so many different options when it comes to choosing a mortgage 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 local lender may be the best option. Often, local lenders are the ones who work around the clock to get your loan through and are available on nights and weekends for any questions that may arise.
Ready to start the mortgage process? Our online application takes anywhere from 5-20 minutes to complete. Once it’s submitted, we can have you pre-approved for a loan in just a few hours.