Financing in Chicago>Question Details

Yolanda Peop…,  in 60619

What all should be taken into consideration when trying to chose a lender? What questions should be asked to help me choose?

Asked by Yolanda Peoples, 60619 Thu Sep 9, 2010

I was told that I should get at least 3 pre-approvals but I don't want to keep having my credit run. Are there initial questions I can ask to help me narrow down the list and eliminate companies before getting too far into the process? Thank you in advance for you opinions and comments.

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There are several questions you can ask a lender.
1. Do you represent a mortgage broker, mortgage banker, consumer finance company or a financial institute?
2. Are they licensed in your state?
3. What is the interest rate?
4. How long will the interest rate be locked in?
5. What are the broker's/bank fees?
6. What is the interest rate?
7. What are the costs associated with the loan?
8. What is the principal balance of the loan?
9. What will monthly payment be?

10. Due date of payments.
11. Term of loan.
12. Will loan be sold and to whom?
13. Who is the lender?
14. Is there a penalty for early payoff
15. What is the appraised value?
16. Are you going to be responsible for Private Mortgage Insurance (PMI)?
17. Who is the title company?

I hope this help with your search for a lender.
If you are respresented and have an agent, you agent may be able to refer you to a lender. Do your homework.
0 votes Thank Flag Link Fri Sep 10, 2010
Hi Yolanda, I wouldn't make this more difficult than it needs to be. If you are working with a buyer's agent, I would trust the agent's lender of choice. If you really want to compare, you can also check with the bank you currently do business with. What are you really shopping around for, rates? If so the rate that you are quoted today, may not be the rate available when you are ready to close. Service should be your priory when choosing a lender not rates.

Also when your credit report is pulled by multiple financial institutions within a short window, it has minimal impact on your credit score, it is understood that you are shopping around for financing. If you went to a department store and applied for a credit card for example, you could potentially max out on that new credit card at that given moment, that type of activity will impacts your credit score.
1 vote Thank Flag Link Thu Sep 9, 2010
If you're working with a realtor you trust your realtor may be able to give you at least three referals.

You don't have to go through the whole preapproval process where they pull your credit, yyou give your financial documents (pay stubs, tax returns, bank statements, etc) ..but you can do a pre-qualification where they can use information you provide that may be limited to how much you earn, how much you owe, and how much you have saved.

During the prequalification --- and interview --- you should be able to determine and develop rapport with each one. At some point in time, you'll gauge which one you feel can meet your needs on many levels, including empathy and understanding of your situation, resourcefulness, responsiveness, and simple case of "connection"

I haven't had good experience with, and therefore I don't recommend working with out-of-state/area and different time zone lenders . You need someone whom you can call on a cell phone if necessary. Because invariably, if/when escrow gets hung up, it's probably due to a lending glitch. So your lender must be totally accessible and available to act on those challenges quickly and effectively.

Good luck!
1 vote Thank Flag Link Thu Sep 9, 2010
First of all, make sure you are dealing with reputable companies before you give them your personal information. is a great first place to start or get some referrals from local real estate agents. Most agents have several good mortgage brokers that they work with frequently.

Don't hold me to this, but I believe that if you have your credit run by multiple mortgage companies within a 30 day period it doesn't impact your credit any more than just one inquiry would. Something to keep in mind. Some mortgage brokers and lenders on here can confirm whether this is true or not, but that is my understanding.

Once you have found some lenders that you think you would like to deal with, ask them for an estimate of rates and terms such as closing costs up front before you give them your personal information on an application. Many lenders have their rates published right on their websites or you can use sites like to compare lenders before you even contact them.

The big things to understand up front are interest rates, fixed versus adjustable rates loans, points (prepaid interest), terms of the loan programs (credit score required, down payment required, income requirements), application costs, and closing costs. Be careful with ARMs and loans that have rates that are tied to floating indexes. With today's low rates I recommend that you consider fixed rate loans to lock in your rate long term.
Web Reference:
1 vote Thank Flag Link Thu Sep 9, 2010
I was a Loan Officer and performed other jobs within the same field. The best advice which all of these have been great answers is ask the questions: "What is your service like from start to finish in getting my loan approved and closed?" Plus ask them for references just like you would a contractor. Be upfront with your information that relates to your loan. Running your credit within a short amount of time from lender to lender is important to disclose to the next lender before they run again. Be sure to obtain a copy of your credit report from the first lender and provide it to the next lender. Most lenders can use your credit report initially to give you basic information, but eventually the mortgage company you decide to go with will have to run it again.
Ask them to provide you with a Good Faith estimate which outlines your closing costs and compare each one for costs associated with your loan.

Thank you,
John G Moustis
President / Owner
Phone & Fax: 630-963-6020

Quality building, remodeling & consulting services in the Chicagoland area since 1991
0 votes Thank Flag Link Sat Sep 18, 2010
Perhaps you were encouraged to speak with 3+ brokers or lenders rather than have all request or pull your credit. If your credit, income and assets are straightforward, any mortgage professional should be able to qualify/pre approve you by asking a few questions. An experienced professional will only ask to pull credit if he/she sense there are obstacles.

A great question to ask ... "Broker/Lender what obstacles, if any, stand in the way for you to guarantee you will close + fund me?"
0 votes Thank Flag Link Sat Sep 18, 2010
Your best bet is to contract a mortgage broker. As an independent broker, he/she would be able to get you a preapproval and run it against 3-4 lenders, while pulling your credit report only once. They would also shop your loan for th best rate among all the lenders. Plus traditionally, they get better rates than the banks, as it is.

Good Luck

Elena Ollick
Amerivest Realty
Faith Home Loans
0 votes Thank Flag Link Fri Sep 10, 2010
I would add that the mortgage lender needs to be very familiar with the particular type of mortgage program you are going to use. I had talked with a person for several months and stated all along that I wanted to do a USDA mortgage (already verified income & property eligibility with USDA).

We would talk on the phone or email back and forth and I had given him copies of all required documents (tax returns, W-2's, etc) so he could do full pre-approval. After a while, I would have to keep reminding him that I wanted USDA and not FHA after he would keep bringing up an FHA loan. The clincher for me to change was when we were emailing back and forth and he made the comment that "I don't know when the last time was I did an USDA mortgage." While it may not matter to another homebuyer, that was a dealbreaker for me. I wanted a lender who was very familiar with the USDA process and up to speed on all the recent news. Changed lenders and been very happy. And costs ended up being cheaper too - bonus!
0 votes Thank Flag Link Fri Sep 10, 2010
Hi Yolanda- Your credit will not be affected by having it checked multiple times for the same type of loan in a 30 day period.
A reputable broker or loan officer can give you a good idea about the costs and options for your loan quickly if you have all the pertinent information ready when you contact them.

The type of loan you are looking for, as well as the property it will be attached to would be part of how I would counsel you to look for a lender.

The landscape has changed dramatically over the last 30 months. Different types of banks and brokers have a variety of offerings, and not all equal.

If you'd like more details, drop me a line and in 10 minutes with you on the phone I can give you some direction and suggestions for how to look for the best loan for you.
(773) 732 9123

0 votes Thank Flag Link Fri Sep 10, 2010
I think all of the information below is good. One other thing I would consider is make sure you go with someone you get along with and resposive to you. I cant tell you how many lenders I worked with that wont call their clients back. Especially when there is a problem with a deal. Its like the lender vanishes rather than call up the client to explain what is wrong. I know of some good lenders that dont do this, and trust me there are a TON that do.

Matt Laricy
Americorp Real Estate
Brokers Associate, e-PRO
0 votes Thank Flag Link Fri Sep 10, 2010
Jerry is right. The interest rate is just one of the costs in a loan. You need to evaluate all three costs in comparing lenders. Some lenders will tell you a lower rate than the other lenders you talk to, but in the end you will pay more for the loan because of the points and fees that they charge. We are having better experience getting loans closed these days with direct lenders like banks rather then mortgage brokers.
0 votes Thank Flag Link Fri Sep 10, 2010
Good to shop for rates and terms - as you do, be sure you are comparing apples to apples. Build yourself a spread sheet and do your homework!

Good luck,
Jeanne Feenick
Unwavering Commitment to Service
Web Reference:
0 votes Thank Flag Link Fri Sep 10, 2010
If you are shopping rates- always get answers to these 3 costs of any loan to you- interest rate, points (percentages of your loan amount), and fees.

If you are using a Realtor, they often have preferred lenders. Your answer may be there.

Another way is to ask friends and family who reputable lenders are that they have used.

Make objective decisions on your choices from there.
0 votes Thank Flag Link Fri Sep 10, 2010
Hi Yolanda,

1) To Avoid multiple credit report runs and still get multiple pre-approvals...
What I suggest to my clients who are shopping around mortgage brokers/bankers is to submit application with your 1st mortgage resource. Ask them for a copy of your credit report, which they have run for you. You can then provide that credit report to the next possible mortgage resource. Tell them you undertsand that they may need to run their own credit report for validity purposes should you decide to hire them, but they should be able to assume the one you provide is legitimate and then quote you different loan products.

2) Initial Questions to ask mortgage brokers/bankers...
A) What is the loan product (FHA, 30-yr conventional, 3-yr ARM, etc...)
B) What is the interest rate?
C) What are the mortgage broker's closing costs? Be sure to get specifics. "Processing
Fee"? "Application Fee"? "Appraisal Fee"?

With these three specific questions answered, you should be able to adequately compare different mortgage broker quotes.

Keep in mind that loan officers typically earn 2 ways, through their loan processing/application fees and the yield spread premium(premium paid to loan officers on DIFFERENCE of interest rate they are getting the loan product for and the interest rate they are giving to the consumer)

If you are in need of any professional resources, please contact me.

John Gall
Realty Executives SourceOne
0 votes Thank Flag Link Thu Sep 9, 2010
Hello Yolanda,

I always recommend to my buyer clients to get a pre approval from at least 2 lender, not necessarily more. The reason for that is two fold: a) you shop for your loan (most buyers don't know they should do this, it's no different than shopping for the right home); b) if the lender knows you're shopping around they will do their utmost best effort to compete to get your business.

I recommended this to a client that took my advise and that client went from a 5.375% interest to a 4.875, simply because of comparison shopping. Who do you think got the best of this scenario?

If you don't have a buyers agent please feel free to contact me directly & I will not only guide you but also provide you with financial resources.

Hope this helps & good luck!
0 votes Thank Flag Link Thu Sep 9, 2010
I do not see a reason to get three preapprovals. I suggest you work with a reputable lender and a mortgage pro that is a dedicated resource to you. One thing that has caused me to refer much of my business to a particular mortgage pro is her accessibility and responsivenes.. Also, she has access to and clout to local processing. What you don't want is to be "lost" in a 1-800 nightmare.

Good luck to you,
Jeanne Feenick
Unwavering Commitment to Service
Web Reference:
0 votes Thank Flag Link Thu Sep 9, 2010

I'm not sure why you would be told that. You only need one pre-approval. However, you should research as Terri just said. You can find out a lot of information before choosing a lender. They have to get your written permission to obtain your credit, so do not give them permission until you are pretty comfortable with your choice.

Web Reference:
0 votes Thank Flag Link Thu Sep 9, 2010
Hi Yolanda;
When searching for a lender the first thing to do is ask friends who they used and ask if they were satisfied with the services. Find a local lender because they know your market best. When interviewing lenders, ask what their fees are, origination and processing including all other fees. Ask if they will sell your mortgage or keep it. You don't want your mortgage sold numerous times. Ask how many successful closings they had and rather they were FHA, conventional or VA. Also ask what their typical closing time is. Most lenders take proximately 30 days, and charge an origination fee of 1%. Hope this was helpful. Good luck.
Web Reference:
0 votes Thank Flag Link Thu Sep 9, 2010
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