Choosing the Right Lender Means Doing Your Homework
- Sep. 14, 2011
- Rosemarie Pirio
- Home Loans
When getting a home loan, it is as important to find the right lender as it is finding the best rate and APR. Here is a little something to help you get started on your homework.
1. Choose a Lender That Does More Than 15 Loans a Month.
Not to bag on the little guy here, but if you're working with a lender or a broker shop that has only five or six agents that do maybe two or three loans each a month, chances are their resources are limited. The big deal here is, at that small volume, it's likely they don't have the knowledge or resources to be aware of all the unique mortgage products available to consumers. As they say, knowledge is power, and in this case it's true; if your agent doesn't know about a mortgage product that would be perfect for you and save you money, you aren't going to get it. Working with a mid-sized lender that has a team of agents, a vast mortgage product offering and does about 400 loans a month gives you a better chance of getting a loan that you will qualify for and save you money.
So go ahead and ask: how many agents are at the company, how long have they been in business, what kind of product offering do they have and how much volume do they push out a month.
2. Why Not Go with Your Primary Banking Institution?
These are the bigger guys, for example Bank of America, Wells Fargo, and GMAC. They are your primary institution and you already have built trust with them. Many times you can get the best deals at a bank as they don't have any middlemen they work with or add-on fees. However, if you have any credit issues, you may run into problems in qualifying for a loan with a bank. This is the main reason people don't go with their bank. Banks also tend to offer loans based on what they want to sell, not necessarily what fits your needs best. Reason being, loan officers at a bank don't get paid much commission, if any, on a loan, giving them little incentive to work with a client that doesn't fit “the easy to process” loan. Shop your bank if you have top notch credit, steady work history, and little debt.
3. True or False: a Mortgage Banker Will Better Serve You Than a Mortgage Broker.
Not necessarily true or false.
A mortgage broker is the middleman and acts as a matchmaker between the home buyer and lender. Often the broker has a network of lenders it can look to and find the lender with the right product for your home buying needs. The downside of working with a lender is they may overcharge, their network, and therefore access to programs, may be limited, or they may not present you with options for you to choose from. If you choose a mortgage broker, make sure you do your homework and get referrals.
But, if you are going to be doing your homework in choosing a mortgage broker, you may as well skip the middleman and go to the source of your loan, the mortgage banker. The mortgage banker is a direct lender, they will be the one approving, underwriting and funding the loan. By going to the mortgage banker directly, you are making the entire loan process cheaper, faster and easier. The homework in this scenario: comparison shopping to find the best loan for your needs with the best rate and APR.
Research is required either way, so cut out the middleman and save yourself some money.