How to Select MortgageThe biggest secret to finding a good mortgage lender is patience. There are a substantial amount of options out there, and you'll have to find the right one for you, your family, and your financial requirements. Don't rush into a relationship with the wrong company. Just like when buying a new car, there are plenty of fine print and details to concern yourself over.
1. Name Isn't Everything
When shopping for a mortgage lender, it's important to keep in mind that the institution itself, no matter how secure it might feel, is not the one handling your loan. There is a difference between an organization and the individual representing it. In this case, that individual might be biting off a bit more than they can chew. Just because you think the security of your transaction increases because a big bank is involved, doesn't actually mean it does.
Here's one secret that should steer you clear of a lot of mistakes people make in the mortgage industry: lenders are salespeople. In fact, everything they do is to try and secure your business as a client. Even more, many titles in the industry only convey a sense of duties, not necessarily competence or ability. For example, senior positions usually only mean the individual has been with the company for several years. In other words, a senior loan officer isn't necessarily better for the job than your average loan officer.
2. Everyone Has Costs
Despite the "lowest rates" being advertised to you in a variety of places, every business still has overhead costs. While some take advantage of lower brick-and-mortar costs like rent, utilities, and man-hours by moving a sizable portion of their operation online, even that process costs money. That means that while they are eliminating costs and passing you savings in one way, they cost you more in another.
Make sure to get a detailed list of costs, commissions, and fees involved with your transaction. You might be surprised at how many of these relate to the their ability to work with underwritings, processing, and closing staff. Some will be in other companies, while many try to maintain the entire operation in house. For example, Correspondent lenders employ their own brokers, underwriters, and closers to ensure the process goes smoothly. They also have access to warehouse credit lines to fund loans. This means that you'll save time and energy throughout the process, but because of the convenience and extra work of that particular company, you might end up spending more than you think.
3. In-House Advantage
Speaking of in-house operations, it's also important to note that most real estate offices want to partner directly with lenders to streamline the selling process. That means you could end up with a loan originator from the same location that you found the home you actually want to buy. Are these a good idea? Isn't this a little like finding a swimsuit salesman at the front of the water park? Should you trust this option?
Keep in mind that this arrangement is mutually beneficial for both parties. Mortgage lenders get lots of business from real estate agents, and those agents get kickbacks when they send business to the lenders. Are they still capable of getting you a good deal? Certainly. Do they have your best interests at heart? Probably not. Don't be fooled by the in-house advantage; there are plenty of businesses out there willing to give you a competitive rate.