how to buy a house and pick a mortgage lender.
I’m going to talk about how to pick a mortgage lender. If you don’t need financing, don’t continue reading unless you just want more information. Alright, so how to pick a lender. First off, if you’ve already chosen a real estate agent, this is a good place to start. You could also ask some friends and family members, co-workers, get an idea who they would choose a mortgage lender. Now personally, I have experience in the mortgage banking industry for several years.
There’s three types of lenders out there; number one is your big bank, your Bank of America, Wells Fargo and then you have your mortgage bankers and then you have your mortgage brokers. Now I’m not a real big fan of the big banks or credit unions for that matter. I think there’s a lot of credit unions that are really good, don’t get me wrong and I’m not saying that there is anything wrong with big banks.
I’m not a fan of them and the reason is – the reason why I don’t like big banks is because if you go into a bank like Bank of America or say a Wells Fargo, you are only using their money. So if you go in and you have a very unusual circumstance and maybe you don’t qualify for their loan, they’re not going to tell you “you don’t qualify for our loan, go somewhere else”. They’re just going to say, “You don’t qualify for a loan. Sorry.” Now you may go to a mortgage banker or a broker and qualify for theirs.
So that’s the problem, they are very, very limited because they only lend their money. If you are round, you’re not going to be able to fit in their square hole. So it’s not a really good way. Now if you do use a bank, if you say Bank of America which I’m not a fan at all, I haven’t had them close a transaction on time in years, if they even close it at all. So I got to say that,
Mortgage Lender
the only bank I can say that about. But let’s say you go to a Wells Fargo or you go to a Bank of America, always try to use a local loan office or don’t use someone out of state, because you’ve heard of the term, “out-of-state, out of mind”, “out of area, out of mind”. That’s really how it is. You want someone local that knows the local ways in Texas, and more specifically I’m in Texas, I’m in Houston, so the city you live in. So that would be my first personal recommendation and I know a lot of lenders out there might be getting mad if they’re watching this right now, especially if they work for Bank of America.
But that’s my opinion, I’ve worked with a lot of credit unions when I was in the mortgage lender business and certainly not all of them. Credit unions, the good thing is they really care about their customer. The problem is they don’t really do a lot of training to their loan officers unfortunately. And you know, a lot of times when you’re going into and getting a loan with a bank or credit union, a lot of times the loan officer is on a salary plus bonuses, and you want someone who, if they don’t get you a loan, they don’t get paid any money. That’s the best way you are going to get a loan. So I am a big fan of bankers.
Now really the difference between a banker and a broker, is a banker lends their own money and will underwrite the file, usually in-house. They are also called correspondent lenders.
Now I’ve worked for bankers before, and if bankers just don’t have a competitive program – let’s say you go in and maybe you are a veteran and they’re not real competitive on VA loans, let’s just say. They will usually have brokers that they work with as well as and they could do different things. So they are usually good. Brokers, I’ve worked for brokers when I wasn’t lending as well and it’s the same thing, but the difference is brokers have access to dozens and dozens of mortgage lender. Don’t get fooled by that. Most brokers only have about 5 to 7 lenders they work with at any given time; they might have a lender for their conventional financing, they have a lender for their government financing, they have a lender for their jumbo finances. So don’t get caught up into all that. But the difference between bankers and brokers, if they don’t find a way to say yes, they don’t get paid. And a lot of time what people will do, is they will go out and they will be picking say maybe three companies, and they will call up for a rate quote. But you really, when you are calling up for a rate quote, you need to ask very specific questions and you need to do it all on the same day. Because you could call one institution on Tuesday and rates could have changed up or down on Wednesday.
Then you need to call the same day, you need to give the same parameters for each one of them, “So I’m calling, I want to get a loan amount of $200,000 and what’s your rate lock?” Now I’m not a big advocate of going around and doing rate shopping because at the end of the day, lenders all get their money from the same place at the same price. If you call 10 mortgage lender, probably nine of them are going to give you the same quote for the most part. Now banks will generally be a little bit more in the interest rate, but less in the fees because everything is in-house, where a broker, they get their pricing at wholesale. So there you could usually be more competitive on the interest rates, but they are a little higher on closing costs because they have to sort of outsource it and get it underwritten over here in the process and all that stuff. So get the information and call them all up, talk to them, ask them again the question, why should I work with you, what makes you different, what makes your company different. Whatever you do, whatever they tell you, once you lock in the rate, get a rate lock. You don’t want to be on different pages and they tell you one interest rate and then all of the sudden, you show up at closing and it’s a completely different interest rate, maybe it’s a quarter percent higher. Because the seller doesn’t really care about your loan, all they know is you have to close. So get it in writing from the mortgage lender, I can’t tell you how many people – when I used to be in lending, pretty much everybody that I worked with, I always put everything in writing. No one ever asked me but I wanted it all in writing for the documentation. So always ask for it in writing and really try to take the person who you feel is looking out for your best interest, because at the end of the day, you could have the best interest rate in the world, but if you are on the wrong loan program, the interest rate is sort of irrelevant. So I hope this helps you. Leave a comment, if you have any questions, if you have anything to say, you work for Wells Fargo – please leave a comment because I think it’s going to be real nice, but it is what it is. I wish you the best of luck in buying a home and find a mortgage lender. Have a great day.
