Choosing a lender

When shopping for loan to purchase a property there is an overabundance of information out there, almost too much information, which can make you crazy if you let it. You should do a quick survey on the internet or in the local paper to see what the prevailing rates of interest are. This will give you a base line of reference by which to start.

If you have an established relationship with a bank you have an account or do business with, you can speak with their loan officer. If you or your family has a large sum of money deposited with a lending institution, you may obtain favorable loan terms based on that. Let’s say you are not Donald Trump or Bill Gates, what are supposed to do?

One of the best sources of lenders is referrals from people that you know personally and have gone through the same process you are going through right now. Some of the most successful loan professionals I know make a very good living getting loans strictly from references from satisfied clients. The loan officer or mortgage broker who relies on this type of business will typically be very attentive to your needs. If no one you know has gotten a loan recently, you can get a referral from your accountant or attorney. A real estate broker that you are working with can also give you the name of a lender that their purchasers have dealt with. 

I suggest looking at both a mortgage broker and a lending institution to get a comparison. A mortgage broker will search at more than one lending institution to get a loan that best suits your needs (hopefully). They may charge you a fee for placing such a loan. Sometimes they do not, relying on being paid by the lender they place the loan with. When interviewing a mortgage broker ask them what their fees are and if they are charging you any points. A point is a charge equal to 1% of the purchase price. If it is two points the charge will be 2% of the purchase price.  Going straight to the lender may limit your loan choices but may offer better rates or pricing.You can also go onto the internet (you are already here) and go onto a site that makes multiple inquiries to lenders they are affiliated with based on criteria that you provide.

Please be aware that multiple inquiries into your credit (running credit reports) may be viewed a potential problem from those viewing your history and actually adversely affect your credit. This means that you should limit the amount of times you let prospective lenders run a credit report on you.

Always ask for a good faith estimate to see what their closings costs are and if you have problems with the lender ask or have your attorney ask to speak to a supervisor. It is very competitive out there so the threat of taking your business elsewhere may help. Before you start jumping to another lender, remember that any fees that you have paid (application or appraisal fees) may not be refundable.

Do your research, be realistic and good luck. 

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