Questions to Ask Before Choosing a Mortgage Lender

When buying a house, the lender you partner with can often make or break the entire home-buying experience. Let’s face it. There is a lot to consider, especially if you’re a first-time homebuyer. From interest rates and loan types to closing costs - many people find it challenging to keep up with all the information. This is why it’s crucial that you ask the right questions before deciding on the lender who you will use to secure your new mortgage. Most importantly, you need to choose someone with loan options that suit you and your unique situation.

So, what do you need to look for? What are the best questions to ask potential lenders? How will you know who from the mortgage company to work with? The fact is that rates, loan terms, and products can vary significantly among lenders. That said, here are the questions you should ask the lender to learn what they can do for you. This information will ensure that you’re making an informed and wise decision.

• What loan type is best for me?
• What is the annual percentage rate and the interest rate?
• Can my rate be locked in? And if so, when does this occur during the process?
• How much of a down payment will MY situation require?
• How much are the origination fees?
• What are discount points?
• Do you offer discounts for things such as homeownership classes, automatic bill pay, or inspections?
• Are your terms, rates, closing costs, and fees negotiable?
• What is the TOTAL cost of lender fees that I will pay if you’re my lender?
• Do you offer discounts for certain occupations (first responder, teacher, etc.) or any veteran or active military discounts? (if applicable)
• Do you offer any special first-time homebuyer programs? (if applicable)
• What type of bill pay options are available?
• Is there a penalty for prepayment? Can I pay my mortgage off early?
• Do you process loan approvals “in-house?” Does this company complete its own underwriting, or do you outsource?
• What percentage of your home closings occur on time?

Top Tips for Choosing a Lender

Tip #1: The most important thing is to work with someone who is local and experienced. Every housing market is unique and partnering with someone who is not experienced in your market is often detrimental to your home-buying process, which many buyers don’t realize. Though it can be tempting to opt for what we call a “big box” lender who you see in television and radio ads, it’s vital to ensure that they are experienced in your market and are able to take care of all your needs with the utmost attention and care. Sure, out-of-town lenders do an excellent job of getting your attention through their advertisements, but this doesn’t mean they are going to have what it takes to complete the process and finalize your mortgage. Most of the time, these lenders display office phone numbers with extensions that get turned off on nights and weekends. This means you’ll have a problem communicating effectively with them and their loan team when issues arise and you need them most. Moreover, they’re usually too big or too busy to provide you with the personal level of attention that’s required to meet the strict deadlines that come with the lending process.

Tip #2: Choose a local home loan originator. Local mortgage companies are better versed in your local market and connect with you in a more personal manner that ensures their services fit your unique needs and situation. We find that big banks usually want only certain types of clients. So, if you don’t have a perfect credit score or can’t meet the stringent down payment requirements, they will not be a good fit for you.

Tip #3: Get a second opinion. As with anything else, there’s nothing wrong with shopping around to compare lenders. This will ensure you get the best possible rate and terms for you. Since everyone has different needs, you want to be certain that you’ll have access to the best program to fit your needs. Ask each lender you speak with the questions we listed above, as this will help you understand what each one has to offer.

Closing Thoughts

Ultimately, when choosing a mortgage lender, knowing what questions to ask ahead of time is a great way to make the entire process much more manageable. We always recommend that our buyers shop with local lenders, as they are more knowledgeable about the market in which you’re buying. A suitable lender will be ready to answer any questions, provide you with plenty of program options, and be willing to learn about your unique situation to help you choose the best loan program for your needs. Most importantly, the right mortgage lender will focus on building a solid, long-term relationship with you and be eager to keep you as a lifelong client. In other words, they won’t be trying to just close a deal!

Are you searching for a local, reputable lender? Our team has assisted hundreds of people in the Mid-Missouri region with buying and selling homes. Hence, we’ve worked with various lenders through the years and can recommend trusted local lenders with a track record of on-time closings for you to speak with and consider for your mortgage needs. Call us today, or complete the form below, and we’ll gladly answer all of your questions!