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How To Choose The Right Mortgage Lender

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The home buying process can be overwhelming, especially when you’re a first-time home buyer.  Trust me…I see it all the time…the deer in the headlights look when I begin to explain all of the components to a successful transaction. It’s stressful, and one of the most important things buyers can do, is to line themselves up with an agent that knows how to manage and guide them through the process.  But…the agent isn’t the only key player in the transaction.  Just as important is who a buyer chooses for a mortgage lender.  A quality lender can make or break a deal and they can also be the difference between a stressful transaction and one that flows smoothly from start to finish.  The problem is that most buyers have no idea where to begin when choosing this key player or what they should be focusing on when evaluating their different options.  Is it the interest rates?  Is it the amount of experience?  Is it the name of the company?  All good questions, and important things to consider, but there’s so much more.  That is why I’ve put together the following list of important considerations when choosing a lender.  Take a look….I think you might find a couple of things you hadn’t though of.   Here are the do’s and don’ts of making your mortgage lender decision.

  1. Consider how long a loan officer has been in the business:  20 years in the business doesn’t necessarily mean they are good at what they do, but you want a loan officer that is experienced enough to have seen pitfalls and snags that can come about during the lending process and how to properly manage them.  Despite any and all efforts to avoid the snags, they will happen, and an experienced loan officer will know the necessary steps to take in order to avoid killing the deal.  Ask questions about their experience…it’s worth knowing!
  2. Get recommendations from friends and family who’ve had a good experience: This should speak for itself…nothing like getting the thumbs up from someone you already know and trust.  Reviews and referrals are everything these days.
  3. Get recommendations from your real estate agent: Good agents know good lenders.  If they’ve been around awhile, they’ve worked with a lot of them and they’ll be happy to make a recommendation as it only makes their life easier.  When they know a lender who can consistently get the job done while providing great experiences, they’ll recommend that lender all day long.  Keep in mind that they shouldn’t be financially benefiting from the referral, so that shouldn’t alter your trust in their recommendation.
  4. Focus on the experience and relationship with your loan officer: In most scenarios, your loan will be sold to another company who will manage your mortgage once the sale is complete.  Because of this, you’ll want to focus on the relationship with the officer.  The strength of the company matters only in whether or not they can actually lend you the funds.  The loan officer will be your point of contact and the person responsible for whether or not you have a quality experience.  Once your loan is sold, you may never hear the mortgage companies name again, but the relationship that you have with your loan officer will have a lasting effect.
  5. Inquire about how your pre-approval is determined: Is it screened through an underwriter?  Are they looking at your financial statements or is it just what you relayed to them over the phone?  Have they pulled your credit?  Nothing like getting three weeks into a transaction and finding out your lender didn’t do their homework and they can’t do the loan.  Make sure they are reviewing all of the necessary documentation and getting you a pre-approval that actually holds water.
  6. Inquire about their fees and rate options: A little added cost may be worth it for the experience and the confidence that the job will actually get done, and be cautious regarding the discount lenders!!! They may look great on the surface, but they can often make your transaction way more stressful than its worth!  Many of these lenders are located in different parts of the countries and may not be used to the closing procedures for your particular area.  Just keep in mind…discounted priced usually means discounted service.
  7. Find out where their closing team and/or underwriter is located: Are they on the east coast and working on a three hour time-difference?  If there is a problem with a file, can your loan officer easily pick up the phone and find out what an underwriter is looking for?  Many loan officers have a relationship with their underwriters and can easily communicate with him/her throughout the transaction.  This doesn’t mean the underwriter will cut corners or go against their policies, but it does mean that problems with the file can be communicated easier and underwriters can get what they’re looking for upon initial request.
  8. Determine how they plan to communicate and how you should expect to be updated on the process: Communication is key and you should know how they plan to update you and how they will be reaching out when they need more information or documentation.  Whether it’s a weekly text, an app that they give you access to, daily emails, or personal phone calls, make sure you know the plan and that they intend to stick with it.  You don’t want to be in the dark as your deal moves along!
  9. Don’t place too much focus on the name/brand of the company (Bigger doesn’t mean better): I’ve seen people shy away from good lenders because they’ve never heard of the company, and I’ve seen the big banks drop the ball on countless loans.  Don’t fall into the trap of thinking that the bigger banks will give you a better experience just because of their size.  Yes…big banks may have some specialty products that they can offer, but do your research and make sure you even need that specialty product.   Often times, greater size means less personalized customer service.

Overall, there’s a lot to consider when choosing a lender and a whole lot of questions for you to ask.  Do you your homework and it will certainly pay off.  Remember, your buying experience begins with who you choose to have in your corner and it’s hard to shake the memories of a bad transaction.  Line up with the right people from the beginning and set yourself up for success.



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