Are some lenders better than others?
Choosing a lender can be a very difficult task because it's not always what you see is what you get. As in any business, there are ethical business people and unethical business people. Remember the old adage "If it sounds too good to be true, it probably is"? This holds very true in the lending industry.
There are many sources that provide loans to people wanting to buy a home. Of course, the traditional three would be Banks, Mortgage Companies and Credit Unions. Usually, when you stick with someone you know who has been around a while, you will be less likely to get burned. Not that all "new" or "smaller" companies are bad, it's just that it is hard for you to know their track record in the industry. Ask your real estate agent for a list of recommended mortgage companies that he/she has had good success with. No real estate agent wants to work with a lender that they know is unethical or is known for poor service. You can also do some investigating on your own by calling your own bank or credit union and then looking online to compare rates and fees among various lenders. Be aware that there is a difference between a mortgage lender and a mortgage broker.
A mortgage lender has their own financial resources and funds their loans directly. A mortgage broker is a middle man that gathers your credit information and then shops around to find a lender for you. The mortgage broker does not loan money and charges a fee for his/her services. Be very cautious of real estate agents who are also mortgage brokers and tell you that you must go through them to get a loan.
There is no way to know for sure which lender is best for you. The best advice is to shop around, like you would when buying a car, for the best deal. Keep in mind that the company with the lowest interest rate may not be the best deal, because there are other fees associated with a loan. If a lender offers a very low interest rate but wants to charge a 1% underwriting fee and a 1% loan origination fee and a 1% discount point, they are essentially getting 3% of the loan as an upfront fee. It might be better to go with another company who is offering a slightly higher rate and only one of these upfront fees.
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The information contained on this page and website was written and produced by Dave Turnquist and is the sole property of San Jac Real Estate. No unauthorized reproduction or use of this information is permitted without the expressed written consent of Dave Turnquist, Broker/Owner of San Jac Real Estate