How to find and choose a mortgage lender
It's not always easy to find a mortgage lender. The first step, naturally, is to check mortgage rates on Bankrate.com. But that's not the final step. Selecting a mortgage lender should be based on more than just the lowest rate. Gather a few rate quotes, and then follow up with some research and interviews before you choose the lender who is right for you.
"You want to sit down with two or three lenders to make sure you find one who's a good fit, the right match for you as a borrower rather than a product pusher," says Michael Jablonski, executive vice president and retail production manager for BB&T Home Mortgage. "Mortgage lending should be a collaborative process."
A good lender can qualify you for a loan and offer advice on ways to improve your credit and should talk to you about mortgage payments in context with the rest of your financial plan.
Asking friends, family and co-workers for lender referrals can be helpful, along with checking with a local bank, suggests Arlene Allert, vice president and regional manager of Wells Fargo Home Mortgage in San Francisco. Reputable real estate agents can give recommendations, too.
Brian Martucci, a senior loan officer with GetLoans.com in Washington, D.C., says consumers should check on a lender's reputation for getting loans to completion and their experience in addition to comparing mortgage rates.
If you are happy with your bank or credit union, you might want to check on their mortgage loan programs, but Martucci says you shouldn't expect special treatment such as a lower mortgage rate or discounts on fees. Some banks offer incentives to their customers and others don't, Allert says.
"You don't have to apply for a loan to ask questions," says Cindy Tessier, assistant vice president at Navy Federal Credit Union in Vienna, Va. "You can find out a lot by simply calling to ask about loan programs. If the loan officer is hard to reach or gives you a hard sell, you may not want to work with that lender."
Allert says: "Ask if they can explain in language you understand what each option means for you, not just today but for the long term. You also need to find someone who will agree to set expectations upfront, including how long the loan process will take, how often you'll communicate and how you'll communicate -- such as by email or phone."
One of the most important questions, Martucci says, is about turnaround time because so many mortgage loans today are delayed.
Tessier recommends asking who will service your loan because if your loan will be sold, it might be more difficult to track someone down later who can help you with any issues.
Michael Astorino, field mortgage manager at Navy Federal Credit Union in Vienna, Va., says, "You should ask what happens if the appraisal comes in too low or your rate lock expires before closing or there are other problems at the last minute, because your lender should be able to help you set expectations and commit to getting you to settlement."
Astorino says consumers should expect the lender to ask questions in return about long-term plans for homeownership and overall financial goals. "You want someone who focuses on you, not on your loan," Astorino says.
Comparing mortgage loans
"Every lender handles things slightly differently, but you should be able to get a written statement or spreadsheet that gives you a side-by-side comparison of different loan programs," Allert says.
To simplify loan comparisons, Martucci suggests asking only about the interest rate and points on a loan along with the lender fees. "You don't need to ask about taxes and insurance because you can do that later, and that isn't likely to vary from lender to lender," says Martucci.
Astorino suggests that consumers focus first on overall goals such as paying off the loan in a certain number of years or keeping the monthly payments as low as possible, then zeroing in on the lender's fees and the annual percentage rate, or APR.
The ultimate goal, getting to the settlement table with your financing in place, should be met as long as you have chosen a lender who communicates well and offers a consultative approach, Allert says.