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How to choose the best mortgage lender or broker

By | Published: Oct 14, 2009 | 22 Comments

Choosing a lender or a mortgage broker can be an arduous process -- there are so many options to choose from, and your choice will have a large impact on the rates and terms of your mortgage. Follow these tips from Trulia to select the banker or broker who can get the best mortgage deal for you.

  1. Get recs from people you trust

    Ask friends, family and acquaintances who have purchased homes to tell you about their brokers or mortgage lenders. You could also ask a real estate agent whom you trust.

    Ask people to rate brokers they've worked with in terms of the rates and conditions of the mortgages they've received and the ease of working with that broker or lender.

    Questions to ask include: Would they use their broker again, and would they recommend using that broker to anyone else? Did the broker explain their loans' conditions and rates in easily understood terms? Did they get the interest rate they were promised? Were there any unexpected fees?

  2. Shop online

    Surf the Web to shop anonymously for home loans and rates. This will give you a good idea of home loans' rates and fees. One place to try is Trulia Mortgage, which can get you quotes from banks and credit unions across the U.S. -- no personal information is required.

    You can simplify your search by choosing just one type of loan (e.g., a 30-year, fixed-rate mortgage with no points) -- that will make comparing options across the multitude available easier, especially since loan rates and terms can change daily.

    However, when shopping online, it's not a good idea to offer personal information like your social security number or your home address, which can be sold, or used to pull up your credit report.

  3. Go to your bank

    With the information you've gathered online, you can try your bank -- the bank that has your checking account may be willing to offer you a deal -- and compare their offerings.

    Or, go to branches of local national banks, community banks and credit unions whose names you trust. Compare the rates and terms they offer with the ones you found online.

    Check out mtgprofessor.com, which rates banks on factors including the transparency of their loan terms and fees.

  4. Visit mortgage brokers

    Once you've shopped online and at a few banks, visit a few mortgage brokers who've been recommended to you by friends, family and colleagues and see if they can offer you a better deal for your loan of choice. A broker's job is to hunt down a loan by searching the offerings of several lenders.

    Ask the brokers how they will be paid - a broker either charges a flat fee, earns money from lenders, or a combination of both. You want to make sure that their fees don't prove to be too high. You can ask that the broker set his fee (what he will get from you and the lender) in advance in writing, making it no more than 2 percent of the loan. Be sure to have the broker disclose to you in writing all fees, terms, and penalties associated with the loans they suggest.

    You don't want the compensation that a broker gets from a bank to be too high -- this compensation can encourage less than reputable brokers to steer you into loans with elevated interest rates and terms that don't suit your needs.

    You'll also want to ask the broker how many lenders he'll check for you for rates and terms.

    You could also try only choosing from brokers who belong to the Upfront Mortgage Brokers Association. These brokers have agreed to provide advance notice in writing to consumers about the size of their compensations and where their compensations come from. The site offers a tool to search for loan officers by state.

    Another website to check is NAMB.org, the website of the National Association of Mortgage Brokers. There you can look up the names of mortgage brokers in your area.

    Before you hire a mortgage broker, also be sure to check his firm's complaint record with the Better Business Bureau.

Comments

By David Nuss,  Sat Dec 26 2009, 05:18
Other sources are a trusted Realtor and the Title/Escrow office you will be working with during your real estate transaction.

Dave Nuss, Oregon Licensed Real Estate Broker/Realtor
http://www.Homes-SalemOR.com
By Dana Voelzke,  Wed Jan 13 2010, 19:20
When selecting a lender be sure to ask them for a good faith estimate of closing costs. Make sure they talk with you about affordability, that you ask them about different scenarios and that they take the time to educate you about the process. For example, are you going to need to make an offer with a sellers concession so that you roll the closing costs into the loan? Does your proposal include points? If you are buying a condo do you have to look for an FHA condo? What if you don't pay points, how would that affect your monthly payment? Are property taxes going to be escrowed into the payment? What about homeowners insurance? Ask a lot of good questions and make sure you understand your loan completely.
By Fran Rokicki,  Wed Sep 8 2010, 16:53
I recommend that my clients ask their friends, family and co-workers for names of bankers that they have had good experiences with. Ask for their opinions!
By Bobbybroomall,  Tue Oct 26 2010, 09:03
I'm local, and willing to help or answer questions with no obligation. Bob 610-505-1554, a local lender with one of the big 4 Banks.
By California Market,  Fri Apr 1 2011, 13:04
Finding the "right lender", is just like getting married...
Chose the one inspires you trust!!!
By Deborah Garvin,  Sat Jun 11 2011, 16:29
Look for knowledge, experience and accountability. Working with someone who can fund ALL types of loans is very important. Not every loan officer has accesss to VA, FHA, USDA, HECM and renovation 203K loans. Since you are generally starting with the preapproval process you don't want to have to switch lenders because your current loan officer does not do a specific type of loan.
By Richard Littlefield,  Thu Oct 27 2011, 18:37
You forgot the best way to find mortgage broker. Ask a realtor.
By Shawn Rosa,  Tue Dec 13 2011, 10:56
if you are a properly qualified buyer, do not even consider using a mortgage rep that wants to charge you any points
By Steve Patrick,  Wed Dec 28 2011, 17:38
Finding a nationwide lender who can actually close on a manufactured reverse loan has been a challenge. While a few lenders are notable or willing to do a home equity conversion mortgage on a mobile home, these guys have the ability to lend nationwide service on reverse mortgage like Reverse Mortgage Lenders Direct do. Most sites, even trulia, dont cover the programs and requirements for mobile homes and there little information, most of them wrong, about reverse mortgage for manufactured homes. Feel free to visit RMLD site for more info on mobile home HECM loans http://www.reversemortgagelendersdirect.com/manufactured-homes-reverse-mortgage I hope it helps.
By Dori Z, CNE, CDPE,  Sun Jan 15 2012, 15:58
I think its really importnat- especially when buying a home (refinancing an be a little different)- to have the person doing your loan be someone with INCENTIVE to make sure your loan gets done in time and as directed. Hence, there can be some real advantages of using mortgage brokers to do your loan insead of a direct bank, where in some cases there is much more indifference if your loan doesn't close. A mortgage broker has "skin in the game"- and makes their money only from closed transactions. (Typically, they don't get a salary.) Bank employees, by contrast, often get a salary- and hence may not lose as much sleep over a lost deal than someone whose livlihood depends on it.

I take this advise to heart personally as well as professionally. For instance, when I have a property that I want to buy and I want to make sure it closes on time, I go to a mortgage broker who I trust... not a banker who won't lose a paycheck over a lost deal if it didnt come together for one reason or another.

Hope that helps!

Best regards,
Dori Z
By Adrian Provost,  Mon Feb 27 2012, 16:40
Do your due diligence.. Some agents will direct you to their "preferred" lenders only*
By Matie,  Thu Jun 14 2012, 01:41
find YOUR home with us: http://www.indexpost.com/
By Sharon Sullins,  Mon Oct 8 2012, 17:19
Great article
By Charlene Placko,  Mon Oct 15 2012, 00:11
I think asking a Realtor what lenders they'd recommend makes perfect sense. We work with lenders daily. We know which ones can get the job done. Those lenders we recommend also want to KEEP getting recommend by us, so they will do their very best for their agents. The agents don't get anything for referring to them, we just get good service!! Asking friends and family for references is great, but cross reference that with those of a Realtor and you'll be certain to pick a good one!

One important thing I would also suggest is to pick someone local to your area. It's just easier in the long run. You don't have to fool with time zone differences and finding out that "so-and-so just quit and your file was given to Joe, let me transfer you to his extension." Then you find out Joe was given ALL of that lender's files and he has no idea who you are. You can't just go walk in to their office and get it all sorted out. Fun times... as if buying a home wasn't stressful enough.
By Kobe,  Fri Jul 19 2013, 03:49
Internet is the vast and easiest sources for one to compare and make the right selection for the mortgage broker. The main thing one should be aware of is that broker should be registered and belongs to your state or area. Mortgage brokers are quite important to go along, as they acquire thorough knowledge of their field and market as well. Some brokers even help you out with loans (http://www.kwikpayday.co.uk) that are more preferable with your mortgage.
By Michelle Courtney Defiore,  Tue Aug 27 2013, 19:48
It's not like I hate mortgage lenders but it is really hard to find someone who understands your needs. I mean most of them are only looking for income and the amount that they can earn. At least, you should find someone who wants to LISTEN to your concerns. I decided to pay in cash for Pomeroy Potts Point for sale since I had a bad experience with lenders.
By Judi Monday, CRS,  Sat Apr 19 2014, 09:30
Check with your Realtor as well. We work closely with the mortgage broker as part of the overall transaction and can share that valuable insight with you.
By hassaancs,  Tue Jun 24 2014, 07:23
Well, owning a personal property give you an extra advantage of decorating it with confidence as well and choosing a best broker or mortgage lender is very essential for it. These tips are really awesome and useful to buy your dream home.
By Mark Saunders,  Tue Feb 3 2015, 10:37
Check with your realtor they hear the good and bad lender stories
By Mike Parker,  Thu Feb 26 2015, 07:27
Ask your realtor who they would recommend. Agents will know just from doing business with lenders on a daily basis who offers the best products and who has the best customer service.
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