Finding the right mortgage lender is a big part of the mortgage process. The wrong lender can wreak havoc on your finances. Remember, you may have this loan for the next 30 years. Don’t focus on the terms of the loan alone. Instead, focus on the loan servicer too. They play a large role in the success of your mortgage loan down the road.
Shopping around for a mortgage lender means you’ll need to ask questions. It’s okay to treat this a bit like an interview process. After all, the lender is handling one of the largest investments of your life. Here are a few questions you may consider:
- How long does the loan process take? Each lender will have a different answer. Some have larger workloads than others do. Each lender has a different process as well. You know your timeline and what you can handle. Use their answer as a guide when choosing the right lender.
- What’s the process entail? Ask the loan officer how their process works. Who will you deal with? How often will you receive updates? These are important aspects of the loan process. The more communication you have, the more likely you are to understand your new loan.
- Who will service the loan? The bank that gives you the funds isn’t always the loan servicer. You should research the servicer ahead of time. Make sure it’s a bank with a good reputation and reviews. You don’t want to find out after the fact that you have a servicer that doesn’t deliver good customer service.
- How many loans do they close in your chosen program? Let’s say you are using the USDA program. You should use a lender with plenty of experience in this program. Each program has a unique set of requirements. If the lender isn’t familiar with them, it could complicate your loan process.
Talk to Friends/Family
Your friends and family might have good recommendations for a mortgage lender. Talk to them about who they used if they recently purchased or refinanced. Ask them pointed questions similar to the questions above. Don’t just ask what they thought of the lender. Without getting too nosy about their finances, you can get information from them. Even asking what loan program they used isn’t too much information. This can help you determine if the lender may or may not be right for you.
Read Online Reviews
The internet offers a wealth of information today including the good and bad regarding mortgage lenders. Read reviews about potential lenders you may use. See what people have to say. Look for reviews that contain a similar situation to your own. This way you can determine if the lender may or may not work for your situation.
Consider a Mortgage Broker
If you are unsure about where to start, you can use a mortgage broker. They often work with 30-50 lenders. This gives you access to more lenders than you could handle on your own. The broker will look at your situation and match you up accordingly. Of course, you should still do your own research. But at least this gives you a little lead regarding which lenders may suit your situation the best.
Prepare Your Paperwork
Any lender you choose will need your paperwork to process the loan. Even if you just ask for a preapproval, you’ll need to provide them with the following:
- Asset statements
- Employment history
- Liability information
- Personal information to pull your credit
The more paperwork you provide at the onset, the quicker the process.
Obtain a Loan Estimate
Once you narrow down your choices to a few lenders, apply for the loan. This way you will receive a Loan Estimate. Each lender must send you one within 3 days of applying for the loan. The Loan Estimate provides you with information regarding the costs of the loan. It also shows you the interest rate and terms. You can then compare each quote to see which one suit you best.
The Loan Estimate shows you not only what the loan costs now, but what it costs for the entire term. Once you know what you’ll pay, it can help you make a decision. For example, you may prefer a lower interest rate and higher closing costs. Another borrower may want the higher rate but less money out of pocket for closing costs. The Loan Estimate will give you these details so you can choose the lender that’s right for you.
Choosing the right mortgage lender requires plenty of effort. Don’t just use the first lender you find. Get enough details from them so you know what you are getting into. They could make or break a home purchase. They could even affect your finances during a refinance. Take the necessary steps to make sure you are comfortable with your lender before signing on the dotted line.Click to See the Latest Mortgage Rates»