You are window shopping for your dream home, and it’s time to find a Mortgage Lender. You hear the lenders with the cool radio ads and the mortgage company giving away sporting event tickets. Are they the right choice, or is it the lender driving the coolest car? Of course these examples are a little preposterous, and also against current Mortgage licensing regulations, but it may cause you to think about the question for a moment. Here are 6 things to consider when interviewing the best mortgage lender for your dream home purchase.
- Interest Rates: Most consumers, seem to agree that the “Best Mortgage Lender” is the one that offers the lowest interest rates. While price is always a consideration in real estate dealings, the lowest advertised rate is only part of the story in evaluating good Mortgage professionals. Interest rates are only part of what the buyer pays in order to get a mortgage loan. Yes, it is important to shop for a low interest rate, just ensure you are reading the fine print of the term of the loan (30 years, 15 years, fixed, etc), as well as any other fees or “discounts” that are incorporated into the interest rate.
- Fees: Mortgage Fees are typically in two major categories: Origination/Discount points and Administrative Fees. A very good mortgage lender once said to me “You can name the rate, and I will tell you the Fee, or you can tell me the fee and I will tell you the rate.” What this means to you, is the lower the fee, the higher the rate, and vice versa. A viable mortgage professional is required to disclose both rate and fees on application. However. as a consumer you need to be aware of what the disclosure says. In addition, buyers need to be aware of Origination (Discount) fees also known as “mortgage points”. Most lenders have some form of administrative or underwriting fees. These can range from zero to up to $800-$900 per transaction. Again, current laws in Colorado require full disclosure of these, just ensure you are asking all the right questions. Often it is easy to be distracted by a low interest rate that is made up by a large front end fee amount. Please keep in mind, that there are other fees associated with a home purchase like title insurance, closing fees, property taxes and insurance premiums. These fees the lender has no control over and are part of every real estate transaction.
- Provides Pricing Options: A good Mortgage professional will provide options in the area of pricing. Adjusting to a slightly higher rate may keep closing costs down and still allow you to qualify for additional funds if you are in need of funds for home furnishings or renovations. Work with a Mortgage Lender who listens to you and understands your situation, this will ensures that you are provided viable pricing options fitting your individual needs.
- Will Insist on Pre-Qualification: Look for a Mortgage Lender who insists on pre-qualifying you for your home buying needs. The lender should present you with a solid and strong pre-qualification letter. In the current Denver Real Estate Market, it is essential to have this letter included with any your offer you present on your Dream home. When the competition is high, it is always best to be prepared. Lenders can do very complete pre-qualifications over the phone or internet. However, with a decision this large, it is highly recommended that you talk to a person rather than just filling out an automated form online. Make sure that lender provides a detailed home loan proposal BEFORE you go house shopping.
- Good Customer Service and Support: A good mortgage lender has good support for their home buyers. It is important to ask about how their office is structured and who is available and at what times of the day. Ideally, this should be brought up during your initial conversations. Most Mortgage Lenders will have administrative assistants who are an added resource should you need to talk to a person and your Lender is unavailable. Also, ask where underwriting takes place, and how long they typically take to underwrite a file. This can be very important come time to close on your dream home. Good lenders have local underwriters who can make timely decisions.
- Documentation: Get a complete list from your lender of the documentation they will need from you. Be prepared to provide proof of income (W-2’s, tax returns, pay stubs), proof of funds (bank and investment account statements), and explanantion of job changes and credit issues. Don’t be surprised if when your file goes to underwriting there are requests for additional information. Many times, these requests may seem unnecessary, however, they are necessary and normal in the mortgage game.
Still don’t know where to find “The Best Mortgage Lender”? Many home mortgage companies are out there advertising their virtues, and also talking about their low rates. Our best recommendation is to ask a trusted friend or associate who they recommend. There is nothing like repeated high performance to recommend a Mortgage Lender. A Pro will refer you to another Pro for the Best in Service and Value. Here are some of our favorites:
Have additional Mortgage Lending questions or something to add to this article? Contact Us.