How to Pick the Best Mortgage Lender
Local lenders have some advantages over online lenders
It used to be that a borrower just went to the nearest bank when he set out to pick the best mortgage lender. She tied up her horse and moseyed into the bank lobby. Business was often conducted on a handshake with a sole individual entrusted with the job of reviewing her assets and gauging her ability to repay the loan.
There are banks on almost every corner these days. It's still possible to meet face-to-face with a loan officer, but it's no longer necessary. Many loan applications are handled electronically online. In fact, when it comes time to sign your loan documents, a mobile notary can come to your place of business or residence. You don't even have to leave the house.
Keep It in Perspective
It's not how convenient the bank's location is to your home because you don't have to go into the bank to get a mortgage. It's not loyalty to the bank because you're just one of probably a million accounts. It's also not the mortgage interest rate that's promised or even the cost to obtain the loan, known as loan points. Mortgage lenders are extremely competitive and they pretty much all offer the same bag of money.
The number one criterion that will help you to pick the best mortgage lender is customer service. Find the mortgage lender that has the best reviews from satisfied customers.
Ask Your Agent
Your real estate agent is probably in the best position to offer you advice on choosing the best mortgage lender for your needs. He should possess firsthand knowledge of which mortgage lenders perform and which fall short. Performance is extremely important in a real estate transaction. Most transactions that don't close on time are traced directly to the lender's inability to perform.
The best mortgage lenders are those who take personal responsibility for your loan. This means they communicate in a timely and prompt manner. They deliver necessary documents without delay. They anticipate complications and take proactive steps to avoid these problems. They oversee the loan application process thoroughly and competently and they meet crucial deadlines.
Almost every person in a service business today has online reviews. Many third-party websites allow anyone to post reviews so a reviewer might be bogus, perhaps someone with a vendetta or a troll. But most reviews are legitimate. They're from actual customers. You're looking for a mortgage lender with the highest level of customer satisfaction.
As much as some companies try to streamline the process, mortgage lending is still a personalized business. It's not just about the numbers. It is and always will be about happy customers.
Location, Location, Location
Although location or close proximity isn't a requirement for the best mortgage lender, try to ensure that your lender is at least located in your time zone.
There will be crucial funding deadlines and tight timeframes. It can be very difficult to close a home sale in California with a lender located in New York. A wire might not reach the closing agent in time if the cutoff time is 11 a.m. If your mortgage lender calls it a day at 5 p.m. in New York, you can't reach that person after 2 p.m. if you're in Los Angeles.
Opposition From Listing Agents
Many online lenders pride themselves on instant communication and fast turnarounds but one obstacle they all tend to face is opposition from some listing agents. This is especially the case if the situation warrants multiple offers and you're just one of many buyers vying for the same home.
Understand that the listing agent is likely to advise her seller to pick the best-qualified buyer. In this case, a pre-approval letter from a local, well-known, and trusted mortgage lender is likely to carry more weight than an out-of-area lender. A buyer should not be forced to lose her dream home simply because the listing agent is unfamiliar with a non-local mortgage lender, but it can and does happen.
Issues With the Appraisal
The third potential drawback involves how the company will choose an appraiser. Will the appraiser have extensive experience in the neighborhood where your property is located?
Many borrowers have had bad experiences with the appraisal selection. You don't want an appraiser from another town trying to appraise your home in an area where he has little knowledge or experience. This can result in a low appraisal and nobody wants to deal with that setback, especially when it could have easily been avoided.
At the time of writing, Elizabeth Weintraub, CalBRE #00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.