How do I pick the best mortgage lender?
Part of the process of purchasing a home is usually securing a mortgage. Simply google the words mortgage lender and any search engine will provide you 100’s even 1000’s of hits. How do you decide which mortgage lender is the best fit for you? Many search by price, or rate, others look for reviews and ratings and even others might be more likely to go with a familiar name, ALL of those matter.
Everyone knows the big name National Bank chains. Then there are the big advertisers like “Rocket Mortgage by Quicken” who spends oodles of money for your business. There are LOT of companies who try to trick the consumer by adding something to their name like Veterans (then they have nothing really to do with the government or veterans programs). but there is more behind the name than you might think.
The best example of this is a multiple offer situation. In todays real estate market, this is often the case in MANY markets. You are competing against other buyers head to head. The seller is considering several factors when deciding which offer to accept.
- Closing date
- Any concessions the buyer is asking for (closing costs, home warranty etc)
- Loan type or Cash
- Percentage down
- Who is the lender
The bottom line isn’t always about price, often it comes down to the loan terms, or cash, and the lenders reputation. Two similar offers of the same terms, whose name is on the pre-qualification letter can change everything. There are 3 lenders (make that 4 after today) on my list that cause a rapid heart beat when I see their name, if there are options on the table I will typically share my experience with my client and let them decide, to date they have never selected the one attached to a closing nightmare story. Trust your experienced advisor who deals with this daily, in the end the decision is always the consumers, carefully choose.
Typically this is the best way to secure a lender is through the referrals of someone who used them personally (not just a friend in the business). Your REALTOR will also know some local lenders to refer you to. Realtors are a great source to get referrals like this from because they are closing buyers daily. They will only refer their clients to someone who can get the job done. Lastly they rely on referrals for business so it is unlikely they will refer someone who will not do the best possible job for their client. Click here to see some lending nightmare stories.
So the lender often can post an interest rate with lengthy disclaimers about that rate in the small print of the fast talk. What you want to know is what is the APR – The APR means annual percentage rate- this rate is calculated INCLUDING any fees that the lender is charging. So while you might see and add for an interest rate of 3% in the small print you might find the APR to be 5.5%. Find out what the APR is to better understand the hidden fees. Click here to see some lending nightmare stories
What type of lender fees might you expect?
Loan origination fees– I have seen these fees range from $500-$1000, most lenders charge a fee of this type.
Appraisal Fee -I have seen this fee run $300-$500, I saw a lender once charge an appraisal fee, an appraisal review fee and a final appraisal review fee that in the end was a total of more than $1200 to the buyer.