Home Buying in Severn>Question Details

Alex Gom, Home Buyer in Maryland

When to choose a lender?

Asked by Alex Gom, Maryland Fri Apr 19, 2013

Sorry, I have asked a similar question but didn't get a clear answer and my situation has updated so I'm writing another question more clearly.

So I went to multiple banks and got pre-approval letters with some details on rates, estimated closing costs and all. And today I saw this house with my realtor that I would like to put a good offer in. Once the seller accept my offer, I must contact my lender(s), right?

So now my question is do I have to pick out the lender by just comparing those pre-approval letters? or can I actually submit formal applications to all the lenders that I'm interested in and pick one after comparing GFEs?

I'm confused because pre-approval letters are 'estimates' so it will and can change a lot later. Then am I legally allow to apply to multiple lenders to have GFEs compared without any fees or penalties? and select one and cancel the rest later? Wasn't sure how it's normally done with the others.

Thank you.

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Answers

5
Hi Alex,

You over thinking this process in making a lender choice totally based on the "GFE's". You should select a lender based on experience.

Greg Myers
RE/MAX Realty Group
1 vote Thank Flag Link Sat Apr 20, 2013
There is no set answer to this question. Greg makes an excellent point though. It's more than just the GFE. Experience, fees, ability to close on your timeline all factor into the equation.

Also I want to make one thing very clear. You almost certainly do not have ANY actual GFE from any lender at this point. A GFE is called a good faith estimate. The government though has mandated that a GFE not actually be an estimate any longer in most sections. Once a GFE goes to a client it's pretty much set in stone. Lender fees can't change. Attorney fees can only change 10% in total and the transfer and recordation taxes cannot change. I think I can speak for all lenders in that you don't get a GFE until you have committed to a lender and the loan is locked. Before that you get something that looks and acts like a GFE but is NOT binding any way shape or form. Now a good lender tries to get it right and include everything that you'll see on a final GFE at settlement. That's the right way to do it. It's called an IFW but many lenders but again you won't get a GFE until you make a full application and commit to a lender. A small but crucial point. But yes you can apply to all the lenders you like and you can cancel on the rest and pick one but you should be up front with all of them about what you are doing. Shopping lenders is something you need to do but if it were me I wouldn't lock you until you made a firm commitment to me. I hope this makes sense and please let me know if I can be of assistance further. I can also show you everything that should be on a cost break down. It's not complicated, just takes a little time.

Thanks,

Brent Mendelson
Senior Loan Officer
1ST Mariner Mortgage
O-240-235-5314
C-301-412-0259
F-240-235-8236
Bmendelson@1stMarinerbank.com
Lending in all 50 states
nmls#111407
0 votes Thank Flag Link Mon Apr 22, 2013
You do not have to submit a full application to get a GFE from a lender. You will likely need to provide them with basic information to pull your credit since your credit score will have bearing on your ability to secure a loan and determine the rate of interest that you will be charged.

Gather some information from your Realtor including county of home, current tax rate, sales price and any incentives you may have received such as closing help. Present that to the lenders in question and have them prepare a cost analysis for you. This will break down in a clear format all fees and charges for the lender. Be sure to make sure that they are all using the same transfer tax rates, closing costs (such as title insurance and title company fees, appraisal, survey, etc.) and then sit down with your Realtor or one of the lenders to review and understand the full terms.

That should make your decision easy. My best recommendation is stick with a local lender or credit union. Don't use internet sites to choose a Realtor. Once you are under contract to purchase your lender will be the most important link in getting you to closing. If there are issues you want someone close by that you can meet in person.
0 votes Thank Flag Link Fri Apr 19, 2013
Congratulations on finding your home! You can submit to several lenders. That is your right. You could just use the GFE to negotiate in advance. That would save you and the lenders from wasting time. Good luck!
Ariana Loucas
RE/MAX
0 votes Thank Flag Link Fri Apr 19, 2013
Thank you for a quick reply. So there is no fees/penalties from applying to multiple lenders and pick one later? Also is this how everyone else is doing normally? It seems like mortgage loan shopping not a very fair/clear process to me.
Flag Fri Apr 19, 2013
Yes, once your offer is accepted the next step is to apply for the loan at the institution that gave you the approval letter.
In case you have several pre approval letters, approach the different lenders to verify the conditions of your possible loan based on the information that your will provide about the property.
Sometimes the terms of approval might change because of certain conditions of the property.
It will not be advisable to run around applying for the loan at every door you see. That is a task that should be done before looking for properties.
You can always call for free consultation.
Good luck with your future purchase
0 votes Thank Flag Link Fri Apr 19, 2013
Thank you for your advise. And you said "It will not be advisable to run around applying for the loan at every door you see. That is a task that should be done before looking for properties. " Does this mean I should rely on pre approval letters to choose one and apply for the loan?
Flag Fri Apr 19, 2013
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