Once you start the process of looking for a new home, one of the first things you will be asked by a real estate professional is “Have you been in touch with a lender and gotten preapproved for a mortgage?”
Getting preapproved is a critical first step before you can really get started shopping for a house. But many buyers don’t quite understand how much of a role and impact your loan officer will play in the process.
All too often, buyers will just reach out to their bank, thinking it is easiest since they already have some of their personal and account information. Or they may shop all around for the best interest rate. Or they may just do a google search and apply online to whatever company pops up in the top and offers online pre approvals.
My response and feedback to this it a shrieking “NOOOOO!”
That’s not the way to choose a lender or shop for a mortgage.
You need to understand from the start, that your loan officer will actually play a key and integral role in this process. You will be working closely with them from the time of pre approval to the day of closing.
Here are some key questions to ask and things to consider when choosing a lender and seeking a pre approval
- Will your loan officer be available to reach on nights and weekends if/when you need to meet offer deadlines once you find your dream home?
In a fast moving market, multiple offers on a single property are quite common. In those situations, deadlines are often set in which all offers are due. It’s very likely that deadline will be on a Sunday afternoon after you just saw the house on Saturday. Can you get in touch with the lender for him/her to provide you with an updated pre approval and estimated costs for that property before it’s too late?
- Be sure the lender is providing you with a full and genuine pre approval.
A true and valid pre approval will be based on income, assets and credit that is VERIFIED by the lender. If you do not actually provide bank statements, W2s, paystubs and similar to the lender in order to obtain a pre approval, it’s not the real and true pre approval needed when placing an offer on a property. A good listing agent will be calling the lender before their seller accepts an offer to specifically ask if credit, asset and income have been VERIFIED. If the lender can not provide the sellers that reassurance, it can likely lead to an offer being passed over.
This leads to a key side note reiterating the point above and value of your lender being available nights and weekends! That is not only to assist you, but also to be available to answer questions that may come in from the listing agent as sellers are reviewing offers and making decisions (typically this occurs on nights and weekends).
- Will your loan officer be your key point of contact from pre approval to the closing or will you be passed along to other people and department at different stages of the loan process?
At many of the bigger lenders, it’s common for the borrower to be passed along to other departments once you have an accepted offer. Sometimes it’s quite confusing who you should be communicating with. Plus quite frankly, it often seems that a lot of information and documents don’t get efficiently passed along within the company. I know from my experiences with such lenders, I’m frequently asked to provide information that I have already provided to the point of contact from the step prior. I find it quite redundant, frustrating and inefficient.
- How much money will you need to bring to the closing table inclusive of all down payment, closing costs and prepaids?
Don’t just shop and compare rates, make sure that you get estimates for all costs involved with the purchase. Some companies may offer low rates but higher costs somewhere else. Be sure to look at the big picture.
A side note in regards to shopping rates, keep in mind that rates go up and down with the market. They may have changed between the time that you talk to lender A on Monday and lender B on Tuesday.
When it comes to costs, be sure that you are actually comparing apples to apples between different lenders.
- Are mortgages their company’s key focus and source of business?
Some financial institutions offer mortgages to have a well rounded portfolio of services offered but they don’t specialize in them. I suggest you lean towards a lenders that focus on a high volume of mortgages daily. They are more likely to understand and be responsive to the realities of the crazy competitive market buyers face.
- Do you have any friends or family that have used that company within the last year?…what is their feedback and experience?
Recommendations are a great start to finding a good lender. (I always have contacts to offer). But in taking recommendations, please be sure the person offering it has had RECENT experience with that lender. Going to the bank that your parents used 20 years ago is not quite the right direction. Even a lender your friend used 4 years ago may end up resulting in a totally different experience for you today than they had back then.
Frankly speaking, being a buyer can be tough. You can find yourself in fierce competition among other buyers for the home you want. Choosing both the right buyers agent and the right lender to serve you as an effective team can drastically impact your success, your strength and your experience in purchase of your next home.
Looking for a lender? Need a good place to start? Moving the Mitten does have an affiliated in house lender, Moving The Mitten Mortgage Group.
