Choosing a Mortgage Lender
If you are a property virgin and buying your first home or other real estate property that requires financing from a mortgage lender, we need to clear the deck of several misconceptions on who really has the money to loan. You can ignore these first two sentences if you're paying cash.
There are several types of actual mortgage lenders. Banks, credit unions, legitimate mortgage bankers and sub-prime, hard money lenders you should avoid at all costs unless you have bad credit and a FICO score on the south side of 500. With your permission and patience, and in order to make it easy to choose a mortgage lender that fits your needs, here are some facts to salt away in your brain cells.
Walking through a Farmers Market, you'll find four or more vendors selling raw carrots or apples. Upon close inspection you'll notice each vendor pretty much offers the same stuff; except for the price and how courteous the person was to your queries. Choosing a mortgage lender isn't any different. Finding one is easy. They're like ants at a lakeside picnic. You can start your shopping by using some common sense on two very important facts.
#1 - Is the lender reputable? How long have they been in business? Did the BBB show any complaints?
#2 - Closing costs and interest rates! In your choosing a lender get copies of a Good Faith Estimate from each one and read it carefully. If you don't understand the language and terms, seek advice from some person who does. Some lenders may prevaricate to get your business once they find out you're a "virgin."
#3 - Service. Oh, boy. You'll need this. You're going to be bonded to the mortgage lender you choose from your initial application to the close of escrow. - maybe even beyond. So, the question is: Do you feel comfortable with him or her? What does your first impression and/or gut instinct tell you? Was the lender person easy to reach via phone or email with questions? Did the person answer all your questions quickly without using all the tricky lending industry verbage?
#4 - Did your lender offer a varied selection of loan products and pricing? Were you told the difference between a 30 or 15 year fixed rate and an adjustable rate mortgage? This is where you should not let them make the choice. It's also where you should have, prior to the application process, done your own homework. Fixed rates are most always the flavor to choose because nothing in your loan will change during your term unless you refinance. An ARM loan can be dangerous.