7 Steps to Choosing the Right Mortgage Lender

Step 1: Do a monthly budget: Most of us have no idea how much money we can afford in a payment. By doing a monthly budget, you can see how much money you are willing to spend each month on a mortgage payment and stick to your instincts. One of the first questions I ask is “How much are you comfortable in spending on a payment”. Remember, after the paperwork is signed for the loan, your lender is not going to make that payment for you. You will want to make sure you can afford that payment and feel comfortable with your decision.

Step 2: Seek out a mortgage expert for your unique situation: If you’re buying your first home, seek out a lender who specializes with 1st time home-buyers. If you’re buying an investment property, seek out a mortgage lender who can help you maximize your investment property.

Step 3: Choose the lender based on professional service, not on the cheapest rate and fee structure: The old adage “you get what you pay for” is very true in the mortgage business. The best mortgage professionals will come highly recommended and want a little higher premium for their services. This does not mean that they cannot offer you great mortgage interest rates and closing fees, it just means that they do not work for free. Good mortgage professionals will be worth their price in gold. Your goal at the end of the day is to choose the correct mortgage product for your unique situation. The last thing you want to do is spend more money later having to refinance your loan because the wrong product was chosen upfront. Those costs add up over time.

Step 4: Stay away from Mortgage Gimmicks: Again, “if it sounds too good to be true”, this is probably a mortgage gimmick. That 1%, 2% mortgage rates are just that, they are a gimmick. If you heard on the news last night that rates are around 6.5% and someone advertises a 4% rate, then it’s probably a mortgage gimmick. Remember all lenders basically sell the same products and go to the same sources to get the money for mortgage loans. There is no such thing as a “Free” loan. We hear mortgage lenders advertise all the time no closing costs. This is a mortgage gimmick. All they are doing is charging you a higher rate and getting paid by the bank for selling you a more expensive mortgage loan. If a mortgage company is running a lot of slick commercials on TV or radio, be aware that there is a cost built into your loan to pay for those marketing costs. Just because they advertise low rates, does not mean you will get one.

Step 5: Get a personal referral for 2-3 mortgage lenders: Hear is one of the easiest ways to end up working with a trustworthy mortgage lender. Write a list of 4-5 people you personally know in your life who have always been great with their money and ask them if they know of a great mortgage lender. People who are good with their money seek out top notch mortgage professionals.

Step 6: Interview the mortgage lenders and ask a lot of questions: Let the mortgage company know upfront that you are interviewing them for their services. Ask them for personal references. Ask them how long they been providing their services, ask them how much they like their job. These 2 questions will tell you a lot about their character. Ask them about the areas they specialize in. Ask them how they communicate with their clients and ask them about value added services. Ask them about the costs of doing the loan, and which programs would be best for you. Then tell them your unique situation.

Step 7: Take action choose the right lender: By this time, you have decided which lender will be best for you. Let that person know that you would like to work with them to get approved for a home loan. Let them take your loan application and work on getting that mortgage pre-approval.