Wednesday, November 11, 2009

How to Choose a Mortgage Lender

The 2008 crumbling of the economy taught us all a valuable lesson. I’m not surprised to hear a little skepticism out there regarding mortgages. The good news is that many lenders learned what happens when you lend too freely or get too creative. The bad news is that there will always be someone somewhere who tries to manipulate in order to earn a bit more money.

So, what do you do if you want to buy, but are feeling hesitant? Choose a reputable lender, right? Well, the last year showed us that it’s easier said than done. You can’t just stick with a big name lender and be sure you are getting responsible service. Of course this is a credit union blog, so naturally I’m going to recommend that you go to your credit union for a mortgage. But let me tell you really why you should go to your credit union.

#1 Trust: All the web articles always suggest that you go to someone you trust for a mortgage loan. Look beyond a mortgage loan. Credit unions are known for less fees. It’s not going to be any different with your mortgage loan.

#2 Rates: I’ve read several articles that warn not to choose a lender who “won’t quote you a rate over the phone”. That’s not reliable information. Mortgage rates can fluctuate greatly from one day to the next. A lender who commits to rate over the phone hasn’t given you or their financial institution good service. Instead, you’ll want to ask how their rates compare to other lender’s in the same market. And remember, you need to look at the overall loan, not just today’s rate.

#3 Accessibility: I probably should have rated this as #1. Prompt return of phone calls and commitments to answering questions is important. On the flip side, a lender who is always available could be a bad sign as well. Shouldn’t they be busy sometime? Large banks can get overbooked. They may ask you to call back next week or say they call you and then don’t. Credit Unions are smaller and more personal. This is important when you are trying to close on a home purchase by a specific date.

#4 Resources and Connections: Part of the lenders job is to ensure that your purchase moves smoothly forward and there are a lot of people in the way of making that happen. Contractors, inspectors, title offices can all need to be reminded of the importance of your sale—your lender acts like a director. The staff at Coors Credit Union is well connected with all of the key players.

#5 Knowledge & Credentials: It should go without saying but be sure that your lender is licensed and registered. You’ll also want to know that your lender stays on top of the industry changes and developments. Your lender should also be aware of all lending programs: not only those offered by the lending institution but of others. In this way they will be able to help you choose the best program for your situation.

Questions to ask a lender:

§ What are your loan programs? Do you offer VA loans (for example)?

§ Can I see a Good Faith Estimate right away?

§ Could you estimate closing costs for my loan?

§ Can you estimate and explain your fees?

§ Over the last year what percentage of loans did not close on time?

§ Will you get approval for my loan locally?

§ Do you sell your loans?

It’s important that you develop a comfortable two-way relationship with the lender. Buying a home is a big deal, be sure you trust your mortgage lender.

1 comment:

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