Buying a house can be an all-consuming task, and it can be tempting to choose a lender simply based on their big-box name, or the convenience of already banking with them. A little due diligence however, can save you thousands of dollars over the life of the loan, so don’t make the mistake of choosing a lender for convenience. The following 5 tips can ensure you choose the best lender and the right loan to fit your purchase or refinance:
1. Choose a lender before starting your home search. You’ll want to make sure that your creditis in order, and address any blemishes on your report--which can take months. You’ll also need to get pre-approved and determine the right price range and loan type you’ll be using.
2. Search the Internet to familiarize yourself with current rates, fees, lock-in periods, points and origination fees. These can change daily, and sometimes more than once, so check often, and learn what a good rate looks like.
3. Determine if you want to work with a broker, or directly with a banking lender. Working with a broker will generate broker’s fees, but can save you time and often provide a better rate through access to a greater variety of products than a lender might. A broker may be able to find a loan for you if your credit is less than perfect. Banks on the other hand, can be viewed as more trustworthy choice, and may provide borrowers discounts based on a pre-established relationship and access to your pre-existing account information.
4. Get references. Ask your friends, family, co-workers, attorney, financial planner or real estate agent to recommend a good lender. Once you have a list of names, check their online reviews.
5. Once you have your short list of lenders, get quotes from each of them. Measure their responsiveness, courtesy and thoroughness to determine their suitability. Ask for a Good Faith Estimate from each, which discloses and breaks down all fees associated with the loan for the best side-by-side comparison.
Determining the right lender for your transaction is more than just finding the right institution or the right rate. It’s about finding the right person, who will not only provide the best rate, but who is competent and responsive, and equipped with the tools necessary to progress your loan to meet your escrow timeline.