The Smooth Loan Process #2010-05

How Do I Pick My Mortgage Lender? There are many Loan Officers at many mortgage companies to choose from. Most are good. Some are bad. Very few are out to cheat you (and they'll get their comeuppance in the end). So how do you pick your Loan Officer? Clearly, you'll want to make a good decision on who you use for what will probably be the largest purchase you ever make. With a few exceptions, every mortgage lender has the same products. For example, an FHA loan at Lender "A" is the same as Lender "B" or Bank "C". Granted, there are lender specific guidelines to every loan program, but that's another episode. In general, the products are the same regardless of where you get it. Your first step in picking your Loan Officer (LO) should be picking up the phone and talking to your friends and family. Who did they use when they purchased their home? How strongly would they recommend their LO? Did he do a good job? A referral from somebody who has actually worked the person they are recommending gives you the best chance for success in your own transaction. That LO has already proved himself and doing a good job doesn't happen on accident. It takes work. If you don't have any friends or family that can refer you to a LO, then ask your Realtor. Your Realtor has a working relationship with a LO. The longer a Realtor and LO have worked together, the better. That will tell you that the LO has consistently done a good job for as long as the two have worked together. The referral is about trust. Talk to the people you trust and find out who they trust. Once you get that referral, your work is not done yet. If it's practical, make an appointment to meet your LO. You will learn a lot about who your going to be working with just by spending about an hour in completing your loan application. Did your LO answer his phone when you called? Or return your call promptly if he couldn't answer? When you meet your LO, did he explain the different options you have for financing? Did he explain why he recommended a certain loan program? Did he provide you a Good Faith Estimate? Did you feel comfortable? If the answer to all of those questions is yes, then you're probably going to be fine. What did you find when you searched your Loan Officer's name in Google? Facebook? LinkedIn? Don't worry about MySpace. Nobody uses that garbage. One of the least important things in determining who to use for your loan is the interest rate or fees. Yeah, that's right. I said it. Seriously, a lender that consistently charges a higher rate or higher fees than the rest of the market is not going to get referral business anyway. I'm very nice, but I can't charge a higher interest rate because of it. Part of doing a good job is providing competitive rates and fees for the services that are being provided. In all likelihood, you would not be able to answer yes to any of the questions from the above paragraph if you were being charged a significantly higher interest rate or fees for your loan. I'm not saying that you should not check around to make sure your getting a fair rate, but the lowest is not always the best. I have friends that blame their Loan Officer (it wasn't me) for their divorce. They found him by calling on a radio ad. They say that the delays in closing which lead to hotel and other expenses put too much of a strain on their relationship. I asked why they didn't use someone else when the loan started going bad. They admitted the LO did not seem trustworthy but the interest rate he quoted was .125% lower than the other quotes they had gotten so they stayed with him. I didn't have the heart to point out that they spent more on hotels, eating out and divorce attorney fees than that .125% in rate saved them. This example is a little extreme. I suspect their were other issues with their marriage, but had they gotten a referral from someone they trusted, they might still be married now. The Smooth Loan Process lesson for today: Work with a Loan Officer you trust, or get a referral for a Loan Officer from someone you trust. Harold Perkins The Mortgage Advantage 480-831-1588 Harold@HaroldPerkins.com