It used to be that a borrower could go to the local bank when setting out to pick a mortgage lender. Business was often conducted with a handshake and a sole individual would be entrusted with the job of reviewing his or her assets and gauging his or her ability to repay the loan.
There are banks on most every corner these days. It's still possible to meet face-to-face with a loan officer—but it's no longer necessary. That's because many loan applications are handled electronically online.
Regardless of how you end up working with your loan officer, these are factors to consider before deciding on your lender.
Find a Reliable Mortgage Lender With Good Reviews
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.
Also, when comparing your options, you should take a close look at all of the cost information involved. When going through the process, you're going to want to ask each loan officer and broker for information on their present mortgage interest rates, whether the rates are fixed (or negotiable), whether the quoted rate is for an adjustable-rate mortgage, and you should ask about the loan’s annual percentage rate (APR).
If you choose carefully—and shop around for the best lender possible—thoughtful scrutinization of each prospective lender could end up saving you thousands of dollars.
Ask Your Agent About Finding the Best Mortgage Lender
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.
Other Considerations When Searching for a Mortgage Lender
The best mortgage lenders are those who take personal responsibility for your loan. This means they communicate in a timely manner—and 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.
Every person in a service business today should have 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.
Consider the Location of the Mortgage Lender
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 ends the work day at 5 p.m. in New York, you likely won't be able to reach that person until after 2 p.m. if you're in Los Angeles.
Be Prepared for 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 Many Borrowers Experience With the Appraisal Selection
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.