It’s Important To Interview Multiple Mortgage Lenders
How To Interview Mortgage Lenders. If you’re buying a home – especially your first home – you’ll likely do lots of research. But while you’re checking into neighborhood safety and the quality of school systems, don’t forget to research your prospective mortgage lender, too.
You may be tempted to go with a lender at your local bank, or maybe someone a relative or friend has suggested. However, it’s important to find someone you trust to walk you through the process and help you find the ideal home loan product to suit your unique financial situation.
How To Interview Mortgage Lenders
Experts recommend meeting with at least three different mortgage lenders before making your selection. This allows time to gauge the lender’s personality and knowledge, but asking the following questions can also help you get the best deal possible on your loan terms:
- Are you offering any special incentives for first-time buyers?
- Do you offer assistance and support to customers? For example, is there a 24-hour customer line?
- What is the best interest rate you can qualify me for?
- Are you an FHA direct endorsement lender, able to offer me loan options with low down payments?
- What is your lock-in policy on interest rates, and how long may I take to decide about a loan offer?
- What are the total fees you’ll charge me, including closing costs, when my loan is processed?
If a lender can’t answer any or all of these questions to your satisfaction, you probably need to keep looking. Focus on finding a lender who takes time to make you feel comfortable and offers support throughout the process.
What is a Mortgage Broker?
Mortgage brokers are independent of banks or other lending institutions. A mortgage broker’s duties Mortgage brokers cannot lend money or approve or deny your loan application. They do process loan applications, however.
Mortgage brokers claim they can find you the best loan rate by comparing many lenders. They may also claim that employing their services can assist you understand the various loan options, help you choose one, and help you navigate the maze of paperwork required to obtain a loan. These claims are sometimes true, but you need to know how much and how properly they are delivered.
If you have bad credit and can’t get a mortgage, a mortgage broker can help you polish your application and find you a few lenders who will give you a loan. Brokers can also aid if lenders refuse to lend on odd properties you want to buy. For example, many lenders dislike dealing with mixed-use (residential/commercial) buildings, co-ops, and tenancies-in-common.
How Mortgage Brokers are Paid
To secure a loan that suits your needs, how much do brokers charge? Mortgage brokers normally get a percentage of the loan amount — usually around 1%, but it can be as low as 0.50% on large loans and as high as 2% on small loans. (You may pay the broker directly.)
If you hire a mortgage broker, keep in mind that, like stockbrokers and auto salespeople, they are paid on commission. For example, the mortgage broker earns more as you borrow. Furthermore, some lenders pay larger commissions on productive loans to encourage mortgage brokers to push them. If you pay a higher interest rate, the actual lender may pay the broker more.
Do Mortgage Brokers add to Your Costs?
Although mortgage brokers are paid by commissions, this does not indicate that using one increases the cost of securing a loan. Most mortgages obtained through a broker have the same interest rate and points as those received directly from the lender. If you secured a loan directly from the bank, you would have had to work with and take up the time of one of their own mortgage employees.
You should consider using a mortgage broker even if you will shop alone. You can at least compare the mortgages you find to the ones the brokers claim they can obtain you. Be wary that some brokers would just assure you that they can beat your finest find. You may later realize that the broker is unable to deliver.
Shop Online Before You Interview Mortgage Lenders
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