Mortgage Lenders
When it comes to buying a home, choosing the best
mortgage lender is almost as important as picking the right house for your family. Over the life of a mortgage, lenders receive hundreds of thousands of dollars of your hard earned money through a relationship that can last 30 years or more. Because of this, you deserve to be treated with respect and honesty from the very beginning. This page will walk you through the essentials that will help you understand how to find the best
mortgage lender for your needs.
Types of Mortgage Lenders
There are three main types of institutions that can give you a mortgage: banks, credit unions and mortgage brokers. Each type of mortgage lender has its own pros and cons. Furthermore, no two
banks, credit unions or mortgage brokers are created alike. In general, there are a few key differences between these institutions.
Banks
This is the first lending institution that comes to mind for most home-buyers. Nationwide and local banks offer a wide range of mortgage options and services. If you already have a checking, savings or some other account with a bank, it makes sense to ask them about their mortgage lending services. While you shouldn’t assume that they will always have the best rates, you may be able to save on fees, pulls on your
credit report and the hassle of beginning a new relationship.
Credit Unions
Credit unions function much like a bank, but they are not-for-profit, member-owned organizations. Credit unions tend to be community, industry or employer specific and account holders are treated as members, rather than customers. Credit unions have been gaining in popularity, particularly due to widespread disillusionment with larger banks in the face of the economic recession. Credit unions have also begun offering more and more financial services, including
mortgages. Because of certain tax benefits that credit unions receive, you may also
get lower rates. Because they are more locally-oriented, credit unions may also have more in-depth knowledge about the local real estate market. However, they may not have as wide a range of options and instruments as a large commercial bank.
Mortgage Brokers
Mortgage brokers are unique in that they are not themselves mortgage lenders. Instead, mortgage brokers have access to numerous lending institutions and can help you get a good deal on a
home mortgage. Whereas a loan officer can only offer you products from one institution, a broker can give you access to mortgages from local commercial banks, credit unions and national lenders. Mortgage brokers have become increasingly popular due to intense competition between mortgage lenders as they give you the widest range of options. However, you will have to pay mortgage brokers a fee for their services.
Referrals and Research
The best place to begin looking for a mortgage lender is by getting a few referrals. We recommend contacting at least two or three different mortgage lenders before making a decision. So where should you get referrals?
Begin by asking friends and family. Ask them about which mortgage lender or broker they used and whether they felt they were treated fairly. Be sure to ask them specifics about why or why not. Also, if they worked with a large firm, ask them which loan officer or individual broker they worked with.
Real estate agents are another excellent source for referrals. You can ask your own real estate agent for their opinion, or you can contact an experienced, high performing agent in your area. Real estate agents work with many mortgage lenders throughout their career and often have a list of reliable lenders. Note that it is illegal for agents to receive referral fees or kickbacks, so you can be better assured that there is no conflict of interest.
Lastly, do some independent research as well. As a general rule of thumb, you’ll want to go with a name that you recognize. This signals that the mortgage lender has had enough satisfied customers in order to stay in business for a number of years. Also be sure to read reviews and testimonials on the web. You can also ask a broker or lender to give you a list of their most recent clients whom you can contact about their experiences.
In summary, shopping and comparing mortgage lenders is much like choosing to work with any professional. There are enough mortgage lending institutions available that you should not have to settle for a broker or lender who is unresponsive, disrespectful or unethical in the slightest. Take time to choose a mortgage lender whose reputation has been vouched or by sources you trust.
The above tips should get you started on narrowing down your choices for a mortgage lender. After that, you’ll want to take time to compare and contrast the offers you’ll receive from your top choices. After you choose a
mortgage broker, read about how to compare mortgage loan offers over at our blog.
Looking for more tips on choosing a mortgage lender? Check out our latest blog posts on mortgage lenders:
What are Private Mortgage Investors?
How to Find a HELOC Lender
What is a Jumbo Loan?
What is the minimum down payment for a mortgage loan?
5 Reason Why The Lender Turned You Down - Alternative Solutions
How to Get the Best Mortgage Rates
Mortgage Broker Pros and Cons
10 Questions to Ask Your Mortgage Lender
