For most would-be borrowers, the challenge is not in finding a mortgage lender, but in sorting through the throngs of banks, online lenders, mortgage brokers and others eager to take your loan application. How do you choose which one will offer you the best deal, and competent customer service to boot?
Cut through the thicket by shopping broadly and then narrowing your focus as you learn more about what type of lending environment makes you most comfortable. Begin to familiarize yourself with various lenders and the deals they're offering by browsing around the mortgage rate tables on Bankrate.com.
Then take your shopping a step further. Go to the bank or credit union where you already have a checking or savings account and ask what types of mortgage deals they offer current customers. And be sure to ask friends and family members for referrals to loan officers and mortgage brokers who gave them good, professional service and helped them find the most competitive loans.
Always keep in mind that, not only are you buying a home, you are buying a very expensive financial product -- a mortgage loan. In fact, if you were to take out a mortgage for $300,000, at 6.25 percent interest and keep that loan for the full 30 years, you would end up spending nearly $365,000 in interest alone! You deserve to be treated as a very special customer when you're spending that kind of money.
DIY or hire a broker?
One important decision will be whether to pursue a mortgage on your own or to use the services of a mortgage broker. While a good mortgage broker can shop your loan among several lenders, it's important to understand that brokers don't have special access to deals that are unavailable elsewhere. And a broker is not obligated to find the deal that is best for you. Some have been known to pair a borrower with the mortgage that offers the broker the greatest profit, instead of the lowest cost to the borrower.
Before working with a broker, take the time to talk with two or three of that broker's most recent clients. Ask if they received the same type of loan the broker promised, if the costs were in line with their expectations, if interest-rate lock-ins were obtained without delay and if the closing was smooth and on time. Even if you decide to work with a mortgage broker, your time spent shopping other lenders will help you judge whether the product the broker comes up with is indeed the best deal for you.
Talk with your real estate agent
Always ask your real estate agent for recommendations to good lenders. Even though some brokerages have their own in-house affiliated mortgage lending businesses, good agents will not limit their referrals to just that in-house lender. And because agents direct business their way through boom times and slow times alike, smart loan officers take good care of the clients sent their way by local real estate agents.