5 Tips To Help You Find The Right Lender
Purchasing a home is likely the biggest investment you’ll ever make, and you scour the market for the perfect home. It’s the purchase you’ll probably be paying off for years in the form of a mortgage – but do you just as diligently shop for the right loan?
Buying a home is one of the most complex transactions you will likely be involved in, with a big question as you start the process: which lender to choose for your home mortgage?
Nowadays, there’s an abundance of mortgage lenders eager to take your loan application; yet, not all lenders and deals are created equal.
A lender may readily accept your application, but that doesn’t mean the deal will have the right terms for you. Since finding the best quote can save you thousands of dollars, it’s crucial to find the best mortgage lender for your needs. And, the interest rate for your mortgage is not the only factor to carefully consider when choosing the best lender.
Here are five tips to help you when looking for the right mortgage lender:
1. Mortgage Broker Or Lender
While banks and lenders work directly with homeowners to provide financing on the retail level, a mortgage broker works for a fee as a middleman between banks or mortgage lenders and borrowers to secure financing for homeowners. Decide whether you need a mortgage broker or not.
There are pros and cons to working with a mortgage broker. A benefit to having a broker is that they can save you time and effort when it comes to finding lenders. Also, if you have trouble qualifying or need to finance difficult deals, banks may turn you away, so using a mortgage broker could be your next best option.
A drawback you should be aware of – brokers earn their money by arranging the deal between the lender and you, which means that you could end up with a lender that offers them the highest profit, but not necessarily the best mortgage for you. Also, some of the mortgage brokers may not be as competent or educated about the loan process, or may not have access to loan programs with select banks, affecting the terms of the deal you’re getting, as well as the approval itself.
If you decide to go with a broker, take the time to do some research, and even ask for references – if they are hesitant to provide references from past clients, this should be a big red flag.
2. Online vs. Local
In today’s digital world, many people are tempted to do everything online. If you do fill out an online form searching for rates, know who and what you’re dealing with.
It’s rather common, although not legal, that online lenders will advertise extremely low rates to lure you to fill out an online application. Once you submit your whole application and they run your credit and get the process started, you’ll get a notification that the introductory rate is no longer available.
Also, you may start to get lots of phone calls from mortgage brokers trying to get your business.
Another aspect of online process of mortgage lending that you need to be highly aware of is the increased risk of fraud, scams and illegal business practices – so, again, you just have to know who you’re dealing with.
If you, like most people, have lots of questions, working one-on-one with a local mortgage broker can be very helpful and reassuring.
With the online process, there is no one to answer your questions, except maybe a 1-800 number with limited hours. This can result in misunderstanding or misinterpreting some questions on the loan application. If you click “enter” and proceed to the next page without reading the fine print, it could lead to higher fees or a problem with your approval later down the line. And a good and continued communication with your lender is vital; especially once you’re in escrow.
3. Type of Lender
Researching the differences between larger lenders and smaller ones will help you decide which one to select. It’s a good idea to sit down with two or three lenders to determine who’s the right match for you as a borrower.
If you prefer more personal customer service and personable experience with a lender who knows your name, a smaller lender may be a better fit for you. If, on the other hand, you are more concerned with getting the right deal, a larger lender may be your best option.
Either way, you want to work with someone who agrees to set expectations upfront, including the loan process timelines, the preferred method and frequency of communication.
4. The Program You Want
Make sure the lender offers the program that is best for you. Not all lenders offer FHA, VA or USDA Rural Development loans. Down payment requirements, loan-to-value ratios and credit requirements also vary by lender. When you get quotes from companies, don’t look at just the interest rate. Look at the rate and all the fees, including points, origination fees and any other fees charged by the lender.
5. Lender’s Reputation
No matter how you find a mortgage lender – it’s essential to do a background check for a lender’s reputation for getting competitive mortgage rates and getting loans to completion, as well as for customer service skills.
Check references and online reviews, and don’t hesitate to ask the lender you’re considering any questions you may have.
Now, since shopping around for the right mortgage lender can be such a task, it’s good to consult with professionals who deal with mortgage lenders regularly to help you filter through the array of lenders and narrow it down to a short list of referrals.
The Levin Law Group attorneys have frequently worked with below listed lenders, not associated with this office, that we highly recommend as they are very responsive to client and attorney inquiries, realistic, competent and reliable to get the deal done, and offer reasonable closing costs.
- Ruben Guallpa: Wells Fargo Bank
- Boris Radchenko: West Town Bank & Trust
Our mortgage lawyers represent clients in all areas of New York, Long Island, Westchester county and upstate NY. Trust the Levin Law Group’s experienced and dedicated real estate lawyers to help you protect your rights and interests.
Contact us today for more information on the recommended lenders, and to learn more about our legal services.