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Why Should You Shop Around for a Mortgage Lender?
It’s more than just an interest rate
Knowing how to pick the right mortgage lender is more than just finding a low interest rate. Of course, that is the most important thing for you, but there is more to consider in a competitive market. You will likely come across a multiple-offer situation in any hot housing market with low inventory and high demand. Since sellers have multiple buyers to choose from, listing agents look at many different factors that go into a buyer’s financing beyond their downpayment amount. They want to be sure that a buyer’s lender is experienced and familiar with the fast-paced housing market. That is why you need a lender who understands the challenges that buyers face and can help you stand out.
Communication is Key
When you are looking for the right mortgage lender, you should have one point of contact handling your loan. Both you and your agent must have their cell phone number and email so you can reach them directly. Ideally, there will be an open flow of communication with text and email chains keeping everyone up to date. It is helpful for your lender and agent to know the state of your loan, what properties you are going to be pursuing, and what tactics you will be employing. When looking to buy a competitive property, things can and often do happen fast and you may need to reach out to your lender at all hours of the day. The best lenders understand that this is a normal aspect of their job and will take the time to support a buyer when they need it.
These factors make the difference for buyers getting the house they want so keep it in mind when choosing your lender. That is why communication between your lender and listing agents is also important when making a competitive offer. When you go to submit your offer, make sure your lender is calling the listing agent on your behalf. This is a chance for the lender to tell the listing agent about your qualifications and answer questions. This is something that your agent should facilitate but it is a worthwhile question to ask of your lender. You can use this when interviewing lenders to gauge their familiarity with common practices when working in our housing market.
Where to Find the Right Mortgage Lender
Now that you know how to pick the right mortgage lender you can start looking for the ones that fit your criteria. Start by talking with your real estate agent. They should have a list of recommended lenders who they have worked with in the past and who have a proven track record of success. In general, I recommend avoiding big banks, online lenders, and credit unions. They have a bad reputation as being hard to contact and practices that can make them less competitive in a multiple-offer situation. Your experiences may vary but just be sure they know the area you are targeting and that they understand how the local market works. You can also ask friends, family, or coworkers who have bought a home recently who they used and what their experiences were.
Remember that you are looking for a mortgage lender who can combine a good working relationship as well as provide a good interest rate. I recommend at least talking to three lenders in your area to find the best fit. If you find one lender you like but another has a better rate, try asking the first one if they can meet or beat the other rate. It is a normal part of the process and can save you lots of money over the life of your loan. Finding the right mortgage lender can take time and effort but using the right one can mean the difference between getting your dream home or not.
