Our home is the single most expensive purchase that most of us make. A decision that is almost as important as which house to buy is which mortgage lender to use. It is important that the entire transaction is handled efficiently and professionally and hopefully you will be signing the papers on the designated closing date. Some lenders specialize in a specific product or service; just make sure that your lender is adequately qualified to handle your particular situation or requirements.
Just like choosing your new home, it is beneficial to shop around and compare not only the services offered and the fees involved, but also the various lenders offering these mortgages. You might want to ask yourself whether or not they are experienced and efficient, how long they have been in business and if they are conveniently located. After all, you will probably be visiting them several times during the loan process. And of course you will want to deal with people who are friendly and helpful as well as knowledgeable.
One of the best ways to find a suitable mortgage lender is to ask around. Ask friends, family or co-workers who they may or may not recommend. Word of mouth is one of the best forms of advertising. Check with the Better Business Bureau to find out whether there have been any complaints against a particular lender. If the lender operates in several different states, it might not hurt to take the time to check with the Better Business Bureau in those other states. If you are searching on the internet or browsing through the phone book, don’t be persuaded to go with a lender just because they have the biggest advertisement.
One of your biggest decisions may be deciding between a larger national mortgage lender and a smaller local lender. Both of these lenders can have their pros and cons. A larger national lender is often a better source of funds; they may have a more diverse range of products and services and may be in a better position financially to lend you money in a particular situation. There is no doubt that a larger company has a better chance of weathering today’s tough economic times, although several large and well known names have had to merge recently to stay afloat.
Arguably, a smaller and locally based lender is sometimes able to offer more personal service. Such a company may also have more experience and knowledge of the local housing market. This is something that absolutely may benefit you in your search for a house. A smaller lender may be anxious to come out on top and keep your valuable business. However, a local lender may not be there for you when you need them to be. Do they have a web site or a toll free number with help available 24/7?
Some lenders have a relationship with a particular real estate agent or company and you may feel pressured to use that lender, though you certainly aren’t obligated to. If your realtor is insistent that you use a particular lender, he or she may be compensated if they bring business their way, this arrangement is commonplace. However, if the suggested lender is reputable and you feel comfortable doing business with them, it does at least save you the time and trouble of shopping around.
There is also the financial angle to consider. What about your personal want to not only get the best possible service, but to receive the best interest rates and closing costs? The ultimate goal is not only to save as much money as possible, but also to have everything explained clearly and in detail. Beware of any hidden charges or fees which weren’t apparent when you originally applied for the loan and also be wary if your lender mentions a “settlement fee” as well as a closing fee, they are basically the same thing. If in doubt, ask to have all these costs in writing before you commit to anything.
When choosing a lender, closing costs will be one of your biggest concerns as they can add up rather quickly. You can expect them to usually total between 2% to 5% of the purchase price of the house. You need to pay the closing costs as well as the money you give as a down payment. Ask for an estimate of the closing costs, as a lender is required to give this to you. This is sometimes known as a good faith estimate, although surprisingly there is actually no law stating that the actual costs must reflect the estimate. Consequently it isn’t unusual for closing costs to be somewhat inflated or adjusted. You should also ask your lender for full details of the mortgage points.
You may be enjoying a close relationship with your mortgage lender for the next 30 years, take the time to choose the lender that is right for you.