Choosing the right mortgage lender can be confusing and stressful, especially for first-time homebuyers. Should a person go with the commercial bank that does lots of advertising, the community bank with hometown connections or the online lender with low rates? Instead of investing $250,000 or more on a “guess,” borrowers can use these tips to select the best loan company for their needs.
1. Rule out the scams and unlicensed operators.
Legitimate mortgage companies stay in good standing with the state banking department or real estate division. They rarely make promises that seem too good to be true.
2. See what people have to say.
What is the loan company’s reputation among current customers, real estate agents and financial advisers? What do the reviews on Yelp, Google, the Better Business Bureau and other websites state? Has a friend or family member had success with this mortgage originator in the past? Keep in mind that even the best mortgage companies receive complaints; how these issues are handled separates the winners from the losers.
3. Match available loan programs to needs.
Does the company offer the most popular mortgage products, including fixed-rate loans, adjustable-rate mortgages, interest-only mortgages, jumbo loans, FHA loans and VA loans? Can the company help with buying a home for the first time or refinancing an existing loan?
4. Compare pricing.
How much are fees, points and interest rates? Is the lender willing to match competitor rates? Even a one percent difference in mortgage rate quotes can add $100 or more to a person’s monthly payment. Honest mortgage lenders should be willing to provide a Good Faith Estimate on closing costs, taxes, title insurance, property insurance, attorney fees and credit checks. Their final settlements should fall fairly close to these estimates.
5. Talk with a few lenders.
Are loan officers easy to reach? Do they provide accurate information and respond quickly to voicemails? Do potential customers feel rushed into submitting an application, or does the loan officer take time to explain the mortgage process in plain language? The best home loan salespeople have the integrity to turn away business when necessary instead of saying just about anything to close a deal.
6. Determine the level of give and take.
Flexibility is especially important for people looking at fixer-uppers and for borrowers with low down payment amounts, poor credit histories or seasonal employment. Is the bank willing to look at each mortgage applicant’s unique circumstances, or are decisions made based on black-and-white numbers only? Does the residential loan officer have the power to make small exceptions in processing? Can last-minute problems be overcome, or will they cause the approval process to start over again?
7. Assess customer service and convenience.
Many banks choose to resell their loans after closing. Does the lender stick with borrowers until the final payment has been made? Do employees build relationships and help customers feel like members of a community? Are representatives polite, friendly and knowledgeable? How are disagreements or mistakes handled? How long are hold times? Do customer support agents work extended hours, or can they only be reached between 9 and 5? Does the company offer a website for 24/7 access and answers to frequently asked questions? Does the lender offer online bill payment or automatic checking account deductions? Can borrowers review past statements and tax forms?
8. Go with gut instinct.
The residential mortgage lender with the slickest advertising may not be the best destination for hard-earned money. Some borrowers prefer to continue relationships with their local banks or credit unions. Others look at ties to the community, charitable donations and the bank’s mission statement before selecting a winner. With all other factors being equal, choosing the best mortgage company may come down to personal fit and gut instinct.