Today, we’re bringing you the second video in our insider tips series, and we’ll be focusing on what to look for when hiring a lender. Often, the first thing that comes to mind when a person enters the real estate market is how to secure a favorable mortgage in the least amount of time. It might seem tempting to push for a mortgage as soon as possible, and it does alleviate a lot of stress to get a loan commitment approval. However, when large sums of money are in play, we strongly encourage buyers to take their time when looking for a mortgage lender. Mortgages routinely follow people for 30 years, so it’s important to find a lender you’re comfortable with.
What’s Less Important
All mortgages have common features; interest rates, monthly payments, down payments, and financial approvals will always be a factor to consider. They may vary from mortgage to mortgage, but more than likely, you’ll find many mortgages where each of these variables fit your situation. Because of this, we recommend looking past this criteria during the initial phase of looking for a lender. Of course, we don’t want to do business with a lender offering absurdly high interest rates, but the sheer number of lenders competing for your business means that this won’t likely be an issue.
What’s More Important
While we can’t ignore the financial terms of the mortgage forever, there are more practical ways to choose the right lender.
Test their communication
As we mentioned in the video, mortgages can be very intricate. As real estate agents, we’re happy to walk you through the process, but only your lender will be able to explain the specific terms of your mortgage, both what they can offer initially, and beyond into the payment process.
To get a good idea of a lender’s communication skills, note how long it takes to receive pre-approval. Most lenders will take a few weeks after receiving the necessary financial information from the buyer to grant pre-approval of a loan, but others can have the process done in days. If your lender drags their feet or isn’t prompt in returning your calls regarding questions you may have, then all signs point to finding another lender.
If they can’t be bothered with your business, you shouldn’t be bothered with theirs. Slow working lenders can lead to potentially devastating situations, especially when passive contingency clauses are in the buyer contract.
Test their knowledge
Look for a lender who seems to know their stuff. Because mortgages are very complex, it’s essential for your lender to have a very thorough understanding of best lending practices, and it’s equally important that he or she be able to help you understand all of this, too. Pick a lender’s brain on mortgage types. Ask them about the differences between fixed and adjustable rate mortgages. Ask questions about the current interest index. If they can answer without hesitation, chances are they pay close attention to changing market trends and will be able to offer a mortgage that is an appropriate match for your personal requirements, as well as the economic state of the housing market.
The lender should have the ability to lay out the nuances of a complicated mortgage and the integrity to make sure the buyer is fully aware of what they would be agreeing to. Remember, you can always ask your real estate agent about anything the lender said. They’ll likely have a good grasp on the validity of what you’re being told.
Discover whether they’re capable of accommodating you
If you’re dealing with a bank or credit union, ensure that they have staff knowledgeable and dedicated to helping buyers through the mortgage process. If you choose a mortgage broker, a good rule of thumb is to ask how many contacts they have with financial institutions. A broker who brings a significant number of offers to the table has earned the trust of many lenders, a sign they’ll be trustworthy. Likewise, more offers also indicate they’re looking out for your best interest. Brokers looking for easy money will push high value loans, as they are paid on a commission basis, calculated as a percentage of the loan’s total value.
The lender you choose during your home buying process will have your financial future in their hands. Take the advice of your Realtor® and combine it with what we’ve offered here before making a decision on a lender. Real estate agents will often be able to refer you to lenders they trust and do business with on a regular basis. Check to see if your agent’s recommended institution can accommodate your needs before searching for lenders on your own.
If you’re in the market for a new home in the Seattle area, contact a member of our team today. Our team knows the Seattle market and can assist you in working with some of the city’s most reputable lenders.