When the time finally comes to buy a home, you will soon realize that there are many ways in which one can find a suitable mortgage. The first question to determine is what entity will give you the money to fund your loan. The complicated aspect concerns how you will choose this entity, as mortgage lenders either provide loans directly to the buyer or through a third-party.
Depending on the kind of loans available, mortgage lenders go by different names in terms of the clients they assist. Depending on how clients are acquired, mortgage lenders can either be known as retail, wholesale or correspondent lenders. Once a customer has selected a type of mortgage lender to work with, a mortgage banker or a portfolio lender then determines how the loan will be processed.
Since getting a loan is a complex financial transaction, finding the right lender is key to making sure your interests are being protected. Here are things to look for when appointing a mortgage lender:
1. Word of Mouth
Relying on the people we trust, such as a real estate agent, financial adviser, family or friend, is typically a good rule of thumb when locating someone to organize your mortgage. In addition, there are tons of online resources available to help you find a lender’s reviews. Lender reviews, whether in person or online, let potential customers know if a mortgage lender is:
2. Quality of Initial Contact
Once you’ve located a potential mortgage lender based on a positive review, it’s time to check if said mortgage lender lives up to his or her reputation. The quality of your initial contact with a mortgage lender will help you answer the following questions:
- Are they responsive?
- Are they friendly and courteous?
- Is their quote consistent with what you saw in an online or offline ad?
- Do they explain the different choices available to you?
- Do they disclose the timeline of the loan?
- When/how rates will change?
If your potential mortgage lender answers these questions effectively and thoroughly, that demonstrates their commitment to providing customers with quality service.
3. Check their Credentials
Although a mortgage lender can impress you with their diligence during the initial phases of contact, it is also important to check their credentials. Find out if your mortgage lender is licensed by the state you reside in, and verify their representation by fact checking their employment with a bank, broker, or finance company.
A mortgage lender that is truly committed to providing excellent service will make sure their responsiveness does not falter at any point.
5. Details, details, details
The last way that a mortgage lender will prove their trustworthiness is by offering information that is contingent on the quality of your loan:
- How your personal information will be kept secure
- The interest rate and how it was conjured
- The fluctuations of the rate
- The implications of an adjustable-rate mortgage (ARM)
- If the rate is being locked
- Closing costs of loans
- Explanation of an APR and how it applies to your loans
- Payment of points
- Monthly payments
- If you will pay a private mortgage insurance
- Prepayment penalties
- Contact for reverse mortgage
- Timeline for closing