Financing in Newark>Question Details

Jr, Other/Just Looking in 07107

What should I consider before choosing a mortgage lender? I would be a first time homebuyer.

Asked by Jr, 07107 Sun Jul 3, 2011

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15
True Mack,
but a lot of real estate agent/mortgage broker referral relationships are about kickbacks and reciprocal referrals; they are not always referred for quality of the appproval.
1 vote Thank Flag Link Mon Jul 4, 2011
-I can't speak for all real estate agents out there... but I can tell you every single real estate agent I've asked values a lender who when they issue a pre-approval letter they stand by it over a lender who has spanking low interest rates & fees and doesn't do a full pre-approval.

I'm in.

I can tell you that one question I ask every selling agent that presents on my listings - what is your relationship to the lender?
1 vote Thank Flag Link Sun Jul 3, 2011
Jane - to your question, yes I think getting a complete approval for a mortgage is more important than terns being offered. Again, don't get me wrong, terms are very important, but not as important as selecting a lender who will get your loan closed... I mean why even choose a lender who *thinks* they can get it done when you can go to a lender who actually *will* get it done? Someone may as well just go to Amerisave, Quicken Loans, or Ditech as pretty much any day of the week those lenders will have some of the best rates & fees - plan A, B & C right there. But we know those lenders aren't very consistent with their pre-approvals, so that would be silly advice.

Most lenders who pre-approve and renege later never actually pre-approved someone, they just pre-qualified someone (see blog post link at the bottom of this response). This is why I see borrowers with even slightly difficult situations get pre-approved by lenders only to see their deals fall apart when it gets to the underwriter (which why in the world they don't have an underwriter review a borrower's situation before going under contract completely escapes me).

With the way I recommend someone select a lender almost always ends up with a funded loan.

Again, start with lenders who will actually approve your situation, then from there you can select the ones with the best terms (if that is what is the *most* important thing to a homebuyer). Doing it any other way is silly in my opinion, and can end up wasting a monumental amount of time as in WEEKS. If you shop for lenders to approve you first, then compare rates, yes you may have wasted hours/days with the lenders who didn't have great rates & terms, but you surely didn't make an offer on a property, put earnest money funds down, pay for an appraisal (which may or may not be able to be used with another lender), and then find out the underwriter doesn't like something...

I can't speak for all real estate agents out there... but I can tell you every single real estate agent I've asked values a lender who when they issue a pre-approval letter they stand by it over a lender who has spanking low interest rates & fees and doesn't do a full pre-approval.

I can't speak for all consumers out there either... but I can tell you every consumer I've asked if they would rather get .125% lower in rate and $500 in less fees, but they may not actually be pre-approved so they'll have to wait and see (1), OR if they would like to get .125% higher in rate, and $500 more in fees, but a pre-approval that has been reviewed by the underwriter going to fund the loan (2), OR if they would like both the .125% lower in rate, $500 less in fees, and a pre-approval that has been reviewed by the underwriter going to fund the loan (3). The order of preference? 3, 2 & then 1.

Which part of step #6 described at http://www.trulia.com/blog/shanethemortgageman/2011/05/the_m… would a homebuyer not absolutely want a lender to do?
1 vote Thank Flag Link Sun Jul 3, 2011
Hi Jr. It's really important that you choose the right mortgage lender/representative and not just someone who has a fancy website or a nice business card. The wrong lender can make the difference as to whether or not you successfully close on your dream home. I've worked with clients in the past who chose the wrong lender (as opposed to choosing one who I recommended) and almost lost the deal (by not being able to close on the purchase of their home on time).

I would say the first step to finding the right mortgage lender is to speak with your Realtor regarding who he/she recommends. Your Realtor likely works with a least a couple of mortgage lenders who have proven themselves to be skilled professionals who value your Realtor's business. Therefore when you approach the lender as a client who was referred by your Realtor you will be given priority care and excellent service.

If you aren't yet working with a Realtor who understands the home buying process as well as the city of Newark from the inside out, feel free to give me a call so that we can talk (and yes I work Sundays). Good luck.

Ibrahim S. Hughes
EXIT Queen's Realty
Realtor Associate
4 Bloomfield Avenue
Bloomfield, NJ 07003
Tel: (908) 578-1981
Fax:(908) 320-7997
1 vote Thank Flag Link Sun Jul 3, 2011
Once again Mack gets my vote for great answer - in recommending mortgage reps I look for reliability and strength of preapproval - and in order for me to be helpful, access. I can't stress how important this is when you hit a bump in the road. Both access to the mortgage rep and the mortgage rep's involvement throughout AND direct access to the processor.

Best,
Jeanne Feenick
Unwavering Commitment to Service
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Sat Jul 9, 2011
No, I am not implying that. Not sure if you saw - but I recommend you get at least 3, and even up to 6... it's the very first thing I typed:

"Explore at least 3 options, and preferably at least 1 mortgage broker, 1 mortgage loan officer who works for a bank, and also one that would work at a smaller direct mortgage lender (not a broker, and not a bank, just a mortgage lender who arranges loans and sells them afterwards - usually to the banks)... it wouldn't be a bad idea if you had the time to interview up to 6. That way you can get a feel for how each does business, because not every mortgage broker is the same as another mortgage broker, etc. "
0 votes Thank Flag Link Sun Jul 3, 2011
Shane are you implying that it is impossible to get 3 "honest" preapprovals to choose from?
So if the person gets only one preapproval how will they know if it is an honest preapproval? I am sure all bankers and brokers will claim theirs is solid.
So please explain to Jr. how he will know which lender is not telling the truth and which is telling the truth.
0 votes Thank Flag Link Sun Jul 3, 2011
Shane,

I have owned a mortgage franchise for over 6 years, and have seen rates, points and terms differ extremely on GFE's--so much that it could cost the consumer $10,000 to $20,000 more if they chose the wrong one. So if you do not compare, you are basically playing Russian Roulette with the future of your finances.
The same way people shop and compare prices for a $25,000 car, they should also shop and compare for a $250,000 mortgage.
Complete preapprovals are important, however if one deal falls through you still have two other options as a plan B and C, if you were smart to compare from three.
Just my opinion......that's what i would do if I were buying a house now.

So you really think a complete approval is more important than the cost of borrowing money or the monthly payment you commit to for 30 years? First of all, no preapproval is set in stone. Most lenders reserve the right to reneg on preapprovals for any reason they deem necessary.......so let's agree to disagree on that. ;)

Jane
0 votes Thank Flag Link Sun Jul 3, 2011
Who do they know?

The thing is, Jr, when you walk into a bank or call up someone from out-of-the-blue, they want you to be their client. But if you are referred to someone, say, by your real estate agent, then that mortgage rep doesn't just see you as a client to satisfy, but that agent is also, essentially, a client to satisfy.

It's difficult to compare rates and programs, especially since they change so quickly and it's difficult - if not impossible - to get them all simultaneously.

All the best,
0 votes Thank Flag Link Sun Jul 3, 2011
Hi Jane - I respectfully disagree with the "Apply to 3 banks or mortgage companies, and request a Good Faith Estimate (GFE) from each one so you can compare the rates, terms and fees. That is the only thing that matters." comment - actually I find that someone choosing a lender that way is more often than not going to have issues when it comes to their financing when buying a home.

Are rates, fees & terms important? EXTREMELY. But not as important as making sure a homebuyer is using a lender who does a complete pre-approval.

It's like starting off interviewing real estate agents to see which one would give you the biggest piece of their commission as a credit to the closing costs... it's a good way to set oneself up for disappointment.
0 votes Thank Flag Link Sun Jul 3, 2011
Apply to 3 banks or mortgage companies, and request a Good Faith Estimate (GFE) from each one so you can compare the rates, terms and fees. That is the only thing that matters.
All lenders can sell your note to another after, so it doesn't really matter which lender you begin with, the rates and fees will always stay the same.
Be sure to let each loan officer know that you will be comparing, so they will cut the sweet talk and give you their bottom rates upfront.

Good luck!
Jane
http://www.RealTerrific.com
0 votes Thank Flag Link Sun Jul 3, 2011
Jr,

I would recommend NOT using an online lender. Buying a home and getting your first mortgage are very big steps in life and I wouldn't trust that to an online lender. I think its important to not only be able to talk to the loan officer on the telephone but also be able to meet with them in person so they can go over different options, the process, the fees, etc. I'm not saying that you can search for local lenders online and/or real estate agents but once you find ones with whom you think you'd like to work with, contact them personally on the telephone and meet with them.

I think you can start with your bank and/or credit union. You can ask your real estate agent (if you have one) for several recommendations. We work with many loan officers and can definitely provide you with a few recommendations.

there are many great suggestions below and buying your first home is a huge step and probably the biggest financial decision you will make and shouldn't be trusted to just anyone. Shane gives some great examples of questions to ask your local lender/loan officer. Ask questions! Demand answers!

Good luck,

Gina Chirico, Sales Associate
Lattimer Realty

Essex County Real Estate at its BEST!
0 votes Thank Flag Link Sun Jul 3, 2011
Explore at least 3 options, and preferably at least 1 mortgage broker, 1 mortgage loan officer who works for a bank, and also one that would work at a smaller direct mortgage lender (not a broker, and not a bank, just a mortgage lender who arranges loans and sells them afterwards - usually to the banks)... it wouldn't be a bad idea if you had the time to interview up to 6. That way you can get a feel for how each does business, because not every mortgage broker is the same as another mortgage broker, etc.

You'll want to ask what the pre-approval process entails and how long it takes. Will the underwriter who will be allowing your loan to close be the person reviewing your file as part of that process? Will it just be the loan officer reviewing your information? Will they even ask you for documentation?

You'll also want to ask what types of programs they offer, and once your documentation has been thoroughly examined you'd want to get what options would then apply to you, as well as ask what your loan officer thinks would be the best loan program for your situation.

You'll want to ask what type of fees & costs you could expect to incur along the way (credit report, earnest money deposit, home inspection, appraisal fee, closing costs, etc.), how much those costs are estimated to be, and when they are expected to be paid (at the time the service is performed, at closing, etc).

You'll also want to ask what type of loan terms can they offer you if you were to lock in your interest rate today.

You should also ask when & how they will be available - are you someone who likes to discuss things after the normal work hours on the phone? In person on a Saturday? Through email?

There are more variables to think of, some will be important to you and others will not, however I truly believe that you will have a feeling inside of you of pure comfort when you have found the loan officer who will be the perfect fit. You will leave the conversation having a full understanding of the road ahead and what is expected of you, as well as you'll feel the loan officer has left no stone unturned when going over your situation.
0 votes Thank Flag Link Sun Jul 3, 2011
You want to make sure that they are a mortgage broker or if they service their own loans. A mortgage broker could have extra fees that you may be able to save on. Make sure they have first time home buyer programs for you. I would like to meet with you and discuss the home buying process with you. Please email me if you would like to get together.
0 votes Thank Flag Link Sun Jul 3, 2011
The first question I would ask:
Do they sell the loan, or do they keep them and service them?

I would recommend getting at least two quotes.

Good luck and may God bless
0 votes Thank Flag Link Sun Jul 3, 2011
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