When people start looking for a mortgage, they’re typically looking for two things: competitive rates and low fees. While these are good starting points, they shouldn’t be your only points. After all, mortgage products are a commodity. There’s little difference between one mortgage and another. So what else should a homebuyer consider to narrow the playing field? I advise my customers to look beyond low rates and set their sights on finding a reputable, honest lender.
Although mortgage products are typically roughly identical, mortgage lenders themselves can vary quite a bit. Some are local banks with a solid reputation. Others are large national chains that have exploded in the past couple years. Not all are created equal. And if you choose 1-800-LOANS to save an eighth of a percentage point, it could end up costing you in the end. For example, if your lender does not move fast enough to approve your loan within the contingency period, you could forfeit your earnest money deposit — typically 1-3% of the purchase price. Meanwhile, you’re also losing valuable time. If you aren’t granted an extension to finalize the deal, you could ultimately lose your dream home to another buyer. That’s an awful lot to risk for an eighth of a percentage point. But in mortgages as in all things, you get what you pay for.
When choosing a mortgage lender, ask yourself these seven questions:
1. Is your lender local?
Local lenders have local experience, so they can also offer recommendations for the top real estate agents, appraisers, real estate attorneys, and inspectors in your area to help ensure your transaction will go smoothly. They are also able to offer more personalized, high-touch service. They know your name, they know your face, and they know you’re more than a transaction.
2. Is your lender stable?
You want to work with a lender who has been in business for many years, who has plenty of money to lend, and who has a reputation in the community for ethical practices. At Cambridge Trust, if we sell you a loan, we’re going to stand behind it. That peace of mind is worth a lot.
3. Is your lender honest?
In the wake of the financial crisis, today’s borrowers are more mindful than ever to find a lender who will keep their best interest at heart. So I have no incentive to sell you something that isn’t right for you. I’m not going to oversell you. I’m not going to play you. I’m going to help you do what’s right for you, even if it means referring you to another bank.
4. Is your lender responsive?
The homebuying process is a confusing and stressful one, so you’ll want to work with a lender who answers your questions promptly and thoroughly. I treat every customer like they’re my only customer. The faster I can get them the answers they need, the faster this tedious process is over for them.
5. Is your lender a good listener?
A good lender doesn’t just lend you money; they lend you advice. Steer clear of product pushers, and look for a lender who listens to your situation and proactively asks the right questions to ensure that the mortgage product you’re getting is the best one for you. Sometimes, customers think they need a 30-year fixed when a 15-year adjustable rate mortgage makes more financial sense.
6. Is your lender understanding?
Now more than ever, lenders have to ask for a lot of “stuff.” They have to ask for deposits. They have to ask for forms. They have to ask for copies of this. They have to ask for copies of that. A good lender acknowledges that you have a lot more important things to worry about than sending in your W2s, and they’ll have no problem sending you polite reminders to help keep the ball rolling.
7. Is your lender pleasant?
It sounds like a silly question, but you will be spending a lot of time with your lender. Make sure you enjoy their company to make the experience as painless as possible.
NMLS# 759511. Cambridge Trust Company's NMLS Unique Identifier #697495.