Choosing a Mortgage Lender
Buying a home is likely one of the biggest purchases you will ever make. You wouldn’t trust your car with just any mechanic, so why would you trust your home loan with just anyone who came up on an internet search? Choosing a mortgage lender is as big a part of the home buying process as any other. The right lender can make the process and transaction go smoothly and as pain free as possible. While, the wrong one will give you nothing but headaches. We have Nathan Grojean of Cornerstone Mortgage with us to discuss what makes a mortgage lender a true professional.
There are 4 main factors that make your mortgage lender the right one.
1. Transactional or Relational
You can tell a lot about a lender by where they get their business from. If it is primarily through mass-advertising, they have to find a way to pay for that, and typically their cost structure is higher than someone who works solely off word 0f mouth. Not only that, these companies tend to do transactional business, they don’t need to pass along great deals because the advertising will bring in the next transaction. Great lenders will get all the business they need through referrals, because their business practice speaks for itself. This keeps costs low and gives incentive to have customers that are thrilled with the service.
2. Purchase vs. Refinances
Ask your lender the percentage of their business that comes from purchase transactions. If they get most of their business from refinances, stay away. Purchase transactions are much more difficult, as there are more variables involved. Closing your purchase on time and avoiding last minute stress is vital, and you want a lender that will provide this for you. Lenders who work with a lot of realtors, and can refer you to a good one will tend to perform well on purchase transactions.
When you are looking to refinance, be sure and find a lender who is willing to sit down with you to come up with a debt strategy. There can be multiple options for you on your refinance, and sometimes it’s not always the best idea. Be sure and get all the facts, a loan officer that cares about your business will not steer you in the wrong direction.
3. Competitive Rates and Fees
It’s important to understand the cost structure for lenders, most mortgage lenders will be looking at the same rate sheets. If someone is offering a drastically lower rate than everyone else, it is likely they are building that into the back end. Watch out for these kinds of practices.
A referral based lender will keep their advertising expenses less than 10% of their revenue, while, mass advertising companies will sometime have advertising expenses as high as 50% of their revenue. These costs will in turn be passed onto the consumer.
4. Advice & Relationship
You want a loan originator that is a true expert and can do more than just give you a mortgage. They need to ask consultative questions to help analyze your financial situation and create a debt strategy that leads to wealth creation over time. The goal is to pay the minimum amount of interest on all your debt. Your mortgage can be a major tool to accomplish this goal.
You want a long-term relationship with a lender that can serve as a trusted advisor for years to come. It is important for the lender to monitor your loan to let you know of future opportunities to save money.