Things to Look For in a Lender

So, you are ready to purchase a home and you are looking at your financing options. A question that is probably in the forefront in your mind is – what should I look for in a mortgage lender? In today’s market, you will want to make sure you are dealing with a stable and trustworthy lender. After all, you are starting a long term association with a financial institution that you will come to rely on, and your relationship with that institution will be a determining factor in one of the most important aspects of your life: the place that you live.

The first question is, are you dealing directly with a lender, or are you going through a mortgage broker? Typically, a mortgage broker is an independent professional who works with a variety of lending sources. In this respect, they differ from a loan officer who works under the umbrella of a specific lending institution. Whether you are dealing with a broker, or directly with a loan officer, there are pros and cons to working with both professionals. Mortgage brokers get wholesale rates, so they may be able to get you a better deal from the bank, or be aware of special programs for first time home buyers that you would not otherwise have known about.

In any case, you should not be afraid to ask questions. Do your research before making a decision on a loan.

The following are signs that you are dealing with a reputable source:

  • Can they give you a good faith estimate? The lender must provide you with a detailed list of estimated closing costs within three days of your application for a mortgage. It is advisable to request this list before choosing a loan, as different loans can vary widely in terms.
  • Are they transparent about fees, rates and points? At a customer’s request, mortgage brokers must disclose their fees in writing and in advance. Similarly, the Truth in Lending law compels lenders to be transparent about the APR of the loan.
  • In the end, just be wise and shop around first to see who will give you the best deal. Whether you are dealing with a broker or directly with a loan officer, an educated consumer is a satisfied customer.