Questions to Ask Before Choosing a Mortgage Lender

When purchasing a home, the lender you work with can often make or break your home buying experience. There is so much to consider, especially if you are a first-time homebuyer. From the types of loans available to interest rates to closing costs - many buyers find it difficult to keep everything straight. That is why it is important to ask the right questions before choosing which lender you will ultimately use for your new mortgage. You want to ensure you are choosing a lender with loan options that will be best for you and your situation.

So, what should you look out for? What questions should you ask potential lenders? How do you know who you should work with when choosing a mortgage company? The terms of a loan, rates, and products can vary greatly from one lender to the next. Here are some questions you should ask when shopping around to ensure you know exactly what each lender can do for you. This will help you make a wise and informed choice.

• What type of loan is best for me?
• What is the interest rate and what is the annual percentage rate?
• Can I lock my rate? If so, at what point in the process can I do so?
• How much down payment is required for MY unique situation?
• What are discount points?
• What are the origination fees?
• What is the TOTAL cost/lender fees if I am going to go with you as my lender?
• Are your rates, terms, fees, and closing costs negotiable?
• Do you offer any discounts for things like inspections, homeownership classes, or automatic bill pay?
• Do you offer discounts for my occupation (teacher, first-responder, etc) or any military or veteran discounts? (if applicable)
• Do you offer any special programs for first-time homebuyers? (if applicable)
• What bill pay options do you offer?
• Is there going to be a prepayment penalty if I can pay off my mortgage early?
• Does my loan get approved “in-house”? Does your company handle its own underwriting or is this outsourced?
• What percentage of your closings happen on time?

Important tips when choosing your lender:

Tip #1: You want to work with someone local and experienced. Every market is unique and a lack of experience in your specific market is often detrimental to your mortgage process, which many buyers do not realize. While it can be tempting to work with what we call “big box” lenders that you hear about on the radio or in television ads, you need to ensure they have experience in your market and will be able to take care of your specific needs with the utmost care and attention. Out-of-town lenders may do a great job with advertising and getting your attention on the T.V. or radio, but that doesn’t mean they are going to be able to deliver for you when processing your mortgage. A majority of the time they have an office phone number with an extension that gets turned off on during nights and weekends, and they can’t communicate effectively with you, or even their loan team when you need them the most. They are often too busy or too big to provide the personal attention to detail that is needed to meet the important deadlines with the lending process.  

Tip #2: Work with a local mortgage loan originator. A local mortgage company will not only know your market well, but they will also often be able to connect with you in a way that ensures the loan they are offering fits your unique situation and needs. Oftentimes we find that big banks only want a specific type of client and if you don’t have that exact credit score or that specific down payment requirement they won’t be the right fit for you.

Tip #3: Get a second opinion. There is no harm in shopping around and comparing lenders to ensure you are getting the best rate and terms possible for you. Everyone is different and you want to be certain that you are going with the best program for your specific needs. Ask all of the lenders you are considering the questions above so you can be sure you have a full understanding of what each one can offer you. 

In Conclusion

When deciding on your mortgage lender, asking the right questions ahead of time can help make the home buying process so much easier on you. We always recommend to our buyers that they shop local lenders, as they will be more familiar with the market you are looking to buy in. The right lender will be ready to answer your questions, will have plenty of programs to choose from, and will be willing to connect with you and lead you to the best loan programs suited for your unique needs. Most importantly, the right lender will be focused on building a long-term relationship with you and eager to make you a client for life, not just for the closing.

Are you looking for a local, trusted lender? Our team has helped hundreds of people in the St. Louis area buy and sell homes, and therefore worked with many different lenders throughout the years. We can recommend local, trusted lenders with a track record of smooth, on-time closings for you to interview and consider in your search for a mortgage provider. Contact us today, or fill out the form below and we would be happy to answer any questions you may have!