Choosing Your Lender

When you buy a home, one of your primary concerns will be finding a lender who can provide the financing you need. So how should you shop for a lender? Calling around and asking for interest rate quotes is NOT the best way to select a lender. WHY? Because:

1. Interest rates can change daily, so a quote may not be reality tomorrow.
2. Rates quoted over the phone may not be "locked" prices and the lender wants to get you in the door. This means that the rates would be subject to change until the day your loan closes instead of being pre-determined for a specific period of time.
3. The lender knows nothing about your situation or needs, and the rate they quote may be for a program that you don't qualify for.
4. You won't know what the lender has to offer you.

Competitive rates are important, but when you consider the fact that most lenders get their money from the same sources (and therefore have essentially the same rates to offer) you must look at some other factors before choosing a lender. You need a lender who works with you and your real estate agent as a team and has the same goal - to get your loan closed in a timely and professional manner.

Some of the questions to ask a lender should include:

1. Are they a Mortgage Banker / Direct Lender?
2. A mortgage banker is a lender who not only originates loans, but also underwrites, approves, funds and services them. A mortgage banker has in-house money to lend and therefore has the most control over the loan process.
3. Are they a Mortgage Broker?
4. A mortgage broker originates loans but does not actually lend the money. The broker will submit the package to an outside source that underwrites and funds the loan ... A mortgage broker may offer the best opportunity to get your loan approved since they can send the loan to many different lenders. They also offer a wide variety of loan programs.
5. How long has the company been in business?
6. Lenders come and go. Make sure that the company you are dealing with has been around for awhile.
7. What is the lender's reputation within the real estate community?
8. Do they lock In their interest rates? For how long?