Getting the RIGHT Finance Company to Handle Your Mortgage
by Lauren Kermode
I've put off writing this article because no one likes to be told what to do and/or who to do it with. But this summer has been fraught with loan company problems for some of our clients and it's time we discussed this issue with you.
__• We've talked before about the very first thing to do after you've ___decided to buy or sell your home. That, of course, is to hire the best ___possible Realtor you can. Hire someone who will return your calls, act in ___your best interest and make the transaction as smooth as possible.
___One of the ways your agent will be making things go smoothly is by ___working as the head of a TEAM of professionals whose biggest and most ___important mission is serving each and every one of their clients on an ___individual basis.
__• So who's on this team? In Maryland, your transaction team will most ___likely consist of your Realtor , your loan office (and his/her loan processor), ___your appraiser, your loan company, and any inspectors you're going to ___need during the inspection period. In Delaware, the players are basically ___the same, but an attorney will be handling the settlement for you after the ___title work is completed.
__• It's your right, as the Buyer, to choose who will be on your team. But ___remember, you've chosen your Realtor to head the team so before you get ___yourself in a time crunch situation with an offer you've made on your dream ___home, sit down with your agent and talk about who should be your "first ___line of defense". Here are 5 basic rules to help you choose your finance ___company. Let's start with #2 and save the best for last.
Rule #2: NEVER choose your finance company purely by the interest rate they quote.
Now that doesn't mean rate isn't important - it means that rate isn't everything and more often than not, there will be other "junk fees" that appear on your settlement sheet to make up for the low interest rate you think you're getting.
If you're going to compare finance companies by comparing interest rates, make sure you take the time to also get the loan terms, and all fees associated with that rate. and get them in writing! What good is a 5% loan if there are $6,000 in up-front fees on your settlement sheet to get the 1/2 to 3/4 % break on the interest rate? Make sure you find out how much 1/2 % of your loan would cost per month. That extra fraction of a percent may only have cost an extra $12 per month in your mortgage payment.
Rule #3: NEVER choose your finance company just because the loan officer is your friend.
If you have a friend who is associated with a lender, allow them to compete for your business using the same guidelines you're using for the other finance companies. If your friend objects to this - he/she already doesn't have the professionalism you need to be looking for.
Rule #4: Be wary of mortgage "brokers".
Now, let me qualify this rule. in some cases a mortgage broker is the exactly right person to be working with, i.e. if you have poor credit or if your mortgage needs are more "creative" than most lenders can handle. But in general, there are more hidden fees when a broker "middleman" gets involved. And we find that frequently, once the broker matches you up with an investor, the broker feels that his/her responsibility to remain in contact with you isn't as important. When problems arise in a brokered loan, there are more players to blame.
Rule #5: NEVER use a strictly "internet lender".
If the lender you choose has a website and can be communicated with via e-mail, that's fine. But never, never rely on a company that has no local office, or no local loan officer that can be contacted after hours if the necessity arises.
And now what you've been waiting for.
RULE #1: Let your Realtor help you choose your lender.
Again, it's your money, you're still in the driver's seat and that's the way it should be. But if you've chosen your Realtor because you like them, trust them and recognize in them a high standard of professionalism, then let them help you find a lender to fit your needs.
Most agents have several finance companies they can recommend. These are people their clients have worked with in the past and found to be professional, responsive and who have truly worked in the Buyer's best interest. Our team has a list of about 4 such lenders.
Most agents have finance companies with whom they will not do business. These, on the other hand, are people and/or companies who have created a nightmare situation in the past. Our team has 2 of these lenders so far. In a recent multiple offer situation with one of our Sellers, the fact that one of these 2 lenders provided the pre-approval for the perspective Buyer was enough to cause that offer not to be accepted. We didn't make the decision for our Sellers, we simply told them of our past experience. It was their decision not to allow themselves to become involved with a less than reputable financial institution.