Choosing a Loan Officer

I had a call the other morning from a person moving back east (why, I can’t imagine), and she was asking how she should shop for someone to handle her mortgage purchase loan back there. Normally the real estate agents involved would be the best starting point for recommendations of lenders; however in this case, no agents were involved. Although Mountain Coast is able to, and has, originated and closed mortgages in many other states, in this case a local lender would best serve her. So now the challenge was to provide her with the questions she should be asking in order to find the “right” local person.

I recommended that she start with a large national bank and ask them about their rates, describe the property that she wanted to buy, and have them pre-qualify her for the purchase. This should give her a base rate from which to compare. The next lender to call would be a local bank and ask them to do the same thing. Finally, start calling the mortgage brokers in the area and compare, giving all the information to each. All of the rates should be within a quarter of a point in rate of each other (e.g. 5.25% to 5.5%, both at 0 points), and the other closing costs will all be within a few hundred dollars. If all the brokers she calls are within this quarter a point and one is a full half point underneath, then I would be really suspicious of that broker’s ability to deliver! Be certain to compare apples to apples, not just the rates but also the fees as well and the lock-in period. If one lender offers the same rate as another lender, but will only “lock-in” that rate when it is time to close, then you are at the mercy of the market and the lender. I also told her to make certain that the lock-in time provided was long enough to close the escrow- a 30 day lock-in for a 60 day escrow would not be much good.

Lastly, once she has her choices narrowed down to 2 or 3 lenders, she needs to determine which lender was most responsive to her questions, had questions of their own about the transaction, presented her with different options rather than just a rate quote, and was easiest to reach and called her back when needed. Finally, she needs to decide which lender she felt most comfortable with and had confidence that this lender would perform as promised.

By the time all of these questions are answered and rates and fees are compared, she should have no doubt on which lender to use for her mortgage needs

Posted by bruce at August 25, 2003 10:55 AM