How to Pick a Lender

Picking your mortgage professional is not as easy as selecting a good cantaloupe or watermelon at  the market.   As tempting as it may be, I certainly wouldn’t recommend thumping a Loan Officer on the head to see if there’s anything in between the ears or smelling them to see if their fresh!  So how does a potential buyer decide who they should use for possibly the financing one of their largest investments in their lifetime?

The common process is for consumers to call various mortgage companies and ask “What’s the Rate?”   A borrower who is solely rate shopping may wind up with the best salesperson instead of the best lender.   The whole idea of rate shopping is misleading and a potential for disaster for home buyers or people who want to refinance. 

My recommendation is that a consumer should, instead of going to a bank, credit union and mortgage broker for rate and fees, consider these three options:

1)      Referral from a family member, co-worker or friend who has just bought or refinanced their home.

2)      Recommendation from their Realtor and, ask the Realtor why they prefer the lender over others.

3)      Recommendation from their CPA or CFP for the lender they endorse.

If a consumer does not yet have a Realtor, CPA or CFP, then I would recommend they ask an additional friend, family member and a co-worker for their preferred lender.    Since you cannot work with all of the recommended lenders, the next trick is to narrow it down to the one who will best suit your needs.   

Here are some factors to consider beyond discussing the current mortgage interest rate:

• How long has the loan officer been in the mortgage industry?
• What do they do to continue their education and product knowledge? 
• What mortgage products does their company offer outside of traditional mortgages? 
• How does the loan officer keep track of what the current market and interest are doing?
• After you lock in an interest rate, are you allowed to break the lock, if the interest rate improves?
• Can they provide references for you to contact?
• Will they guarantee the lender closing costs on the good faith estimate?
• How do they communicate?  Do they prefer email or phone calls?  What is their communication style?   
• Do they approach your potential mortgage considering your long term financial goals or simply interested the transaction at hand?

In addition, don’t be fooled by a Loan Officer’s label.   There are many “titles” that LO’s promote on their business card from Mortgage Planner, Mortgage Consultant…they may even throw a Sr. in front of their title.   It’s all marketing unless they have a designation, such as CMPS (Certified Mortgage Planning Specialist) recognized by the Financial Planning Association, CRMS (Certified Residential Mortgage Specialist) or CMC (Certified Mortgage Consultant) approved by the National Association of Mortgage Brokers.

Don’t get me wrong, mortgage interest rates are important and you definitely want to work with a lender who offers competitive rates and products.   However, having a mortgage professional who will help you understand the process, advise you of programs that best suit your personal financial goals and guide you with your future mortgage needs… is priceless.