What to Look For When Shopping For a Mortgage Lender

There’s a lot of competition between lenders looking for your business, and you deserve to find the best fit for you. An article on Investopedia said a Google search for “mortgage lenders” yields around 72 million results. Here is the daunting list of things to think about when choosing a lender.

  • Is this the person I’ll talk to throughout the process?
  • Is this lender a good fit for my style, needs, and personality?
  • Are they available for questions?
  • Is the lender available to coordinate with me and my agent?

You Can and Should Shop for a Lender

It’s illegal for a lender to scare you against shopping for a loan, but that doesn’t stop some lenders from hinting at a non-existent danger. When a lender first pulls your credit, it will show up on your report as an inquiry. A few additional inquiries by other lenders won’t harm you. Lenders recognize you are shopping for a loan.

Will They Work with My Agent?

A lender who will work with your agent is probably the most important factor. Why? Because having timely access to your lender (including weekends and after hours) can help you win the house.

You need a prequalification letter from your lender to support your Offer. Most Listing Agents require a prequalification letter accompany all offers, and not all prequal letters are created equal. A good Listing Agent calls the Buyer’s lender and gets to know their lender. As a Listing Agent, I inquire about research done prior to issuing the prequalification letter. I also try to get a feel for two things: 1) the ability of the lender to close on time and 2) how reachable they are.

Is Your Lender Available to Coordinate with Us?

Timely access to your lender can play a big part in the acceptance of your Offer. Here is just a couple of ways.

  • Provide you with a property-specific estimate of the monthly payment. Property tax can make a significant difference. I’ll provide the information to your lender.
  • Provide you with a property-specific letter to submit with your Offer.
  • Answer questions from the Listing Agent and help sell your Offer.
  • Coordinate with me to structure the most competitive Offer.

Here are a couple of examples of questions I might want to pursue.

  • What can the Buyer offer and still have their desired monthly payment? If the property taxes are lower than anticipated, the lender can help us decide if we can offer more and still have your desired monthly payment.
  • How much “Seller-paids” does the Buyer need? (See note below.)

Types of Lenders

The type of lender you’re most likely to deal with is an intermediary who works between the borrower and the lenders. They shop the various lenders and find one fitting your situation. They do not set the terms of the loan. Most lenders will have a variety of products to offer, so I recommend focusing on service. However, I highly recommend you get a local lender who knows your market.

The Internet lenders (or highly advertised non-local lender) are getting better at competing with local lenders. They’ve stepped up their game both at understanding the different markets and at being available. But it helps to have someone in your own time zone.┬áIn addition, it’s likely a local lender will offer the same incentives as the Internet lender.

Lender Competition

Most lenders are competing on service and good reviews, but you’ll see other enticements too. Closing quickly has become the hot promise, and it’s common to both Internet lenders and local lenders. A local lender has a better chance of realistically assessing those time delaying factors no lender can control. Many times a lender will advertise themselves as “VA experts” or something similar, but I’ve found that to be more of a tagline.

Be skeptical of offers of reduced fees. The fees a lender can charge are set by regulation with both maximums and minimums. But you should be aware that some banks don’t feel the need to compete on fees because they are counting on client loyalty to sell their loans. In other words, your bank could charge more for your loan, but they could also offer incentives like help with Closing Costs.

I have the names of several lenders, and I’m happy to discuss further.

 

 

Note: “Seller-paids” (also known as Seller Concessions) are negotiated monetary amount implemented for the Buyer at Closing. These concessions are used to help the Buyer with their Closing Costs. When several Buyers are making offers for the same property, reducing the requested amount of Seller Concessions makes you more competitive. The amount a Seller can contribute to a Buyer’s Closing Costs is limited by the Buyer’s loan.

Posted on June 19, 2019 at 6:00 pm
Deborah Elwood | Category: Uncategorized | Tagged , , ,

Is it Time to Refinance?

Earlier this year we were concerned about rising mortgage rates, but fortunately, rates are still at historic lows. If you’ve been in your home for a while or just have a rate higher than currently in the market, it may be time to refinance.

Here are some reasons to think about:

  • Lower your interest rate.
  • Lower your payment.
  • To move from one loan type to another. (I’ll elaborate later in this post.)
  • Shorten the term of your loan.
  • Tap equity to use for investment, debt consolidation, or to support college for a child or grandchild.

Reducing your mortgage rate by 2% could make you a good candidate. Here’s a link to the article where I pulled the 2% number.

Why Move to a Different Type of Loan

You may also be a good candidate if you took out a loan with a balloon payment. This is one example of a loan type where you could benefit in moving to a fixed rate loan.

You may have bought your home with a little higher interest rate in order to get the loan. (For example, to offset the lower credit rating you had at the time or get better upfront cash terms.) Refinancing is definitely worth looking into for many reasons, and a lower payment is only one thing to consider.

There is also a VA loan product to reduce your interest or refinance your loan and remain in a VA product. One of my clients was able to use this product to set himself up for a VA assumption when he gets ready to sell next year. I’m not going to post a link here because it’s best to start with a reputable lender and avoid the advertisements a search will bring up.

A lender can help you make the best decision for you, and I’d be happy to provide you some names and numbers. Contact me if you’d like the names of the exceptional lenders my clients have worked with.

 

 

Posted on June 11, 2019 at 8:56 pm
Deborah Elwood | Category: Finance | Tagged , , , , ,