Interviewing your Lender
Just like you shop for a home, you should shop for a lender.
According to the Consumer Financial Protection survey, nearly half of home buyers don’t shop around for a mortgage lender—they go with the first one that comes their way. With the help from a lender I like to work with, we have compiled a list of questions to ask your lender. These questions are here to help you when shopping for a loan.
1. Who will I be working with throughout the process?
This question determines if you are going to be an actual person or a number. It will be a nice piece of mind to know your lender will be by your side throughout the entire process. Working with a company that has many different departments will make you a number. The entire time you are being sent from person to person there will be another client care specialist from another state calling you that is getting prompted by a checklist that has no idea what is going on with your loan. Make sure your loan officer will work with you throughout the entire process.
2. Pre-Approval Process
Will you be verifying all documents?
This includes pay stubs, bank statements, and w-2’s. Imagine if not all your documents were looked at and a lender said you were good to go. You now have found a home, started the buying process, paid for an inspection, and even paid for an appraisal to find out that the lender missed something.
What credit bureau do you use to pull my credit score?
Credit scores should be pulled from all three credit bureaus. You ever wonder why some bureaus scores are higher than the others? This is because not everything shows up on each credit bureau. If a lender only pulls your report from one bureau it may cause problems down the line when all three reports are pulled.
3. What is your average closing time?
Anywhere from 30-45 days is standard. There is no reason a lender would need more than 45 days. If a lender needs more time buyers may incur the costs of going the closing date. Have your realtor read your contract carefully to take note of any fees you may incur for extending the contract past closing.
4. When will my interest rate be locked in?
When shopping for a loan you may get one lender with a ridiculously low interest rate. This should raise a red flag. In the world of lending lenders may tell someone any interest rate until it gets locked in. If a lender tells you a low rate they may add discount points in with closing costs.
Stop! What is a discount point? Discount points are fees paid directly to the lender at closing in exchange for a reduced interest rate. This is also called “buying down the rate,” which can lower your monthly mortgage payments. One point costs 1 percent of your mortgage amount (or $1,000 for every $100,000).
So if a lender tells you 3% before the rate is locked in they may add a few thousand dollars to closing costs and label them discount points. This is money to pay down your interest rate that normally was 5% to the 3% they promised you.
When should your rate get locked in? Your rate should get locked in on your loan estimate. You should get the loan estimate when the seller accepts your offer and you obtain financing. When you have made an offer and the seller signs and agrees to sell to you, you now have a purchase contract. The next step is to obtain financing. You have 3-5 days to obtain financing. This means to sign a contract for your loan. When you sign up for your loan have your lender give you a loan estimate with the interest rate locked in before you sign anything.
5. What hours do you work?
As a realtor I work 24/7. I understand that buying a home is a huge purchase. I want to be available to answer questions at any time. If I work 24/7, it is nice to have a lender with the same hours. If I have to ask the lender “are we still closing Monday?” it is nice to be able to reach them at anytime.
6. What are your lender fees?
Lender fees include origination fees, the cost of writing the loan and closing costs. If you ask a lender what their fees are and they say none it should raise a red flag because how do they get paid? Get a break down of what the loan fees are and what they include.
7. Is there a fee to be pre-approved?
Some lenders may charge a fee just to be pre-approved. Double check to make sure there are no hidden costs.
I am here to help you through every step of the process. Any time you have questions about lenders, houses, or anything else send me a message or give me a call. It is my job to help you!
This content has been written by your Realtor, Lauren Patrick with the help of James Lawrence, Homeside Mortgage.
James Lawrence, who has been a mortgage lender for more than 8 years and an underwriter for 3 years, finds that the best way to find a lender is simple – ask them pointed questions.