Finding the best mortgage lender

David Reed, a mortgage banker in Austin, Texas, and author of "Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You," says, "Good Realtors keep a short list of good lenders and do that not because of referral fees, which are illegal, but because they trust these loan officers to be fair and to get their loans to close on time." Most can offer you the names of two or three lenders with whom they've had good experiences.

Reed does not recommend that consumers buying new homes automatically apply for a mortgage with the lender recommended by the builder, even though builders may offer significant incentives (such as free upgrades) for doing so.

"Get a quote there," he says, "but don't automatically think you're going to get the best deal there." If that lender is charging high fees or a noncompetitive interest rate, that could easily wipe out the value of the builder's incentives.

Unfortunately, no matter how much thought and research you put into choosing the right source for your mortgage, you may eventually end up having your monthly payments handled by an entirely different institution. The right to "service" your loan, that is to collect payments and manage your escrows for property taxes and homeowners insurance, is often sold to other institutions shortly after the loan has closed. Borrowers have no say in the matter; you simply will receive a notice through the U.S. mail from the old and the new servicing companies directing you to send your payment on to a new address. The terms of the mortgage itself will not change.

Even though you may not be able to choose a partner for a long-term mortgage relationship, it is well worth your time to shop carefully for a lender who will patiently explain all the terms of various mortgage products to you, handle your application competently and efficiently, and, not least, who will offer the most competitive loan terms.

How about you? Are you concerned about your mortgage? Pleased with the one you have?
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