Simple question: should I shop around for a lender? I’ve heard it’s good to interview a few different real estate agents before starting the home buying process. Is it the same thought for lenders or are they all pretty much the same across the board because of regulations, etc.?
Clearly, you have read my column and realize I can be pretty verbose, but in this instance, I think I can keep it fairly short! It is really pretty simple, no two lenders are the same and it is in your best interest to shop around and I am not necessarily talking about shopping around for the best interest rate!
Just like in real estate or any other profession, you want to find someone who works in lending full time! They should have years of experience and knowledge. Most importantly he or she should be up on all the latest lending requirements and programs and know what it will take for you to get a loan approved. I know everyone is human and can make mistakes, however, it still amazes me at the sloppiness/last-minute rush that some mortgage lenders put their clients through when it comes down to crunch time. I understand there is a load of paperwork that is required from the buyer when obtaining a loan and getting all that paperwork processed is a time-consuming process that requires systems and processes to ensure proper handling. As with anything you have to ask questions!
Some simple questions to find out more about your prospective lender might be:
1. What kind of experience do you and your team have? If they don’t have a team working with them, move on….There are too many details that can get overlooked.
2. Can I get references? If they don’t readily hand them over, move on.
3. How much time do you need to fund? If they hesitate or say more than 45-60 days, move on (30 -45 days is still typical and a VERY reasonable expectation).
4. Can you guarantee an on-time close? Most should not hesitate to give you a firm closing date. Remember you MUST be timely in document submission. Many times, it is not the lender, it’s the buyer who is dragging their feet and that causes a loan to either not close or delay closing.
5. What are my estimated closing costs and are there any other fees or costs I should know about? They should be able to provide you with a good faith estimate of all your costs right up front and there should be very little change in those costs as you progress to closing.
Clearly, you should find out about the interest rate and the closing costs each lender will charge. However, I will drop this little nugget on you…you will not care or be worried about your interest rate and closing costs if your loan hits a major snag 4 days prior to closing and you lose your dream home. Imagine having to scurry about looking for a short-term rental or ponder moving in with the in-laws for a few months while you sort out your homelessness. NO THANK YOU! Experience matters! I know cost is always part of the equation, however, knowledge, experience, track record, and reputation are more important. Trust me, when a deal starts to go bad, you will throw cost out the window in trade for someone who knows their way around a difficult deal and can find a way to get it closed for you. Dont get me wrong, interest rates are important, but the point is that the rest of the stuff is also VERY important!
Like everything else, do your homework on your lender. No two lenders are created equal and some are better than others. That being said, we have some wonderful Mortgage Lenders in this town who do an excellent job and are really good quality people! Another good way to evaluate a lender is by reading online reviews.
So much for keeping it short! I guess there’s always next time. I hope this helped.