Choosing the Right Mortgage Lender

Often, one of the most difficult parts of buying a home is finding the best lender. There are many to choose from and while in most cases they are honest and trustworthy, there are a number of disreputable lenders as well.

Explore All Your Options

One of the most important parts of selecting a lender is making sure to explore all of your options, rather than simply going with the first lender you speak with. Your bank is a great place to start, because they will usually be able to give you an answer very quickly and in most cases will have a rate that is fairly standard. This provides a great basis for comparison when comparing other mortgage offers.

It is also a good idea to speak with a few mortgage brokers and other lenders. However, often these types of lenders get a commission for steering you towards a specific loan package, so they do not always have your best interests at heart. This is why it is so important to explore all options and compare prospective loan offers.

Going Through Your Real Estate Agent

Usually, your real estate agent will also have a connection or two with mortgage lenders or mortgage brokers, so they might tell you to check them out. It will not hurt anything to hear their offer, as they often do have good rates, but keep in mind your real estate agent gets a commission if you go through this lender, so they are somewhat biased.

Often, making the recommendation is required by the agency they work for, but if they aggressively push it, this is usually a warning sign of a direct conflict of interest. In this situation, such a direct violation of ethics is a good indication that their other advice should be taken with a grain of salt.

Going Through Your the Sellers Broker

Every so often, you will come across a seller that wants you to go through their broker or lender, but, unlike your real estate agent offering you advice, any seller giving you this advice should instantly raise warning flags. It could be a real estate owned property or perhaps a private owner, but whatever the case, the seller obviously has some sort of association with the lender, so this should instantly set your warning bells ringing.

You are under NO obligation to use the lender of the seller and for them to even suggest it, especially if they include it in writing, is a bad sign. In the best case scenario, they get a cut from the sale and simply have poor ethics, but in the worst case, it could be they are in cahoots with the lender to commit some sort of fraud.

Compare, Compare, Compare

In almost all cases, it is important to get several offers and compare them, so that you get the best deals. This way, you know you are getting a good deal and are able to look at an offer and determine if it is at or below market value.

However, make sure that you are not paying any fees for these estimates. The lender should be able to take your information and make an offer, without having to do any checking. This is often called a preapproval letter or a prequalification letter, which basically means that assuming what you told the lender is true, they will be willing to offer you a given rate for your mortgage. This is one of the reasons that being honest is so important, because in the end they will find out if you lie about your credit or revenue.

When it actually comes to time to apply for the loan, most lenders require an application fee, but just to get an estimate, there should be no cost.