| 1. Read and listen to all advertisements
carefully. Many ads mislead about rates and credit eligibility.
Beware of companies advertising unusually low rates. Low rates
often mean high points or that a bait and switch is taking place.
|
| 2. Know the distinction between a direct
lender and a broker. Brokers do not make loans, they arrange
loans. The broker will submit the paperwork to a lender who
will actually be the one to decide whether or not to lend you
the money and at what terms. |
| 3. If you do use a mortgage broker you need
to know how the size of the broker's fee will affect your payment
for the next 15 or 30 years. Insist that the broker give you
in advance, in writing on the lender's letterhead, the fee as
a percentage of the loan amount including any monies paid by
the lender under the table to the broker. |
| 4. Understand the differences between a mainstream
bank and a direct lender. Banks take a long time approving loans,
six weeks or more. Banks tend to focus on full income check
loans and pay close attention to credit scoring. For people
with less than perfect credit or complicated financial circumstances,
direct lenders may be the right choice because many direct lenders
are experts in these areas and can move more quickly. |
| 5. Once you have selected your lender, the
process of care and scrutiny is far from over. Make sure the
lender you are working with is giving you the information you
need. Know what you're paying for! Know the closing costs in
advance. |
| 6. Know how long each step of the process
will take and get it in writing! If timing is important to you
then you had better know up front when you will receive your
money. You could wait for weeks only to be informed that the
loan has been denied or that the terms have taken an unfavorable
turn. |
| 7. Understand who will be approving your
loan. Some lenders approve loans themselves in-house and make
fast decisions. But other lenders must send the loan applications
out to a third party, a process that can take weeks. Make sure
the lender you work with approves in house. |
| 8. Watch for "bait and switch"
practices! If an offer is too good to be true, then it is probably
not true. Make sure all costs are accounted for and confirmed
in writing. |
| 9. Work with a reputable lender. Verify with the State Banking Department, in the state that they are headquartered in and in the state that you plan to do business with them in, if they have any complaints and if yes, the nature of those complaints. Check their references and their history of doing business. |
| 10. Choose a lender who delivers what they
promise. Ask the lender to provide you with a list of references,
borrowers with an income and credit situation similar to yours.
A good lender will have many borrowers willing to say good things
about them. |
|
These rules make sense, don't they? The important
thing is to spend a little extra time and effort making sure they
are followed. Choosing the right lender will get you where you want
to go. You'll secure a loan for yourself that will accomplish your
goals and improve your financial situation. The process will be
faster and easier, even enjoyable. A mortgage is a major financial
transaction. When you choose a lender you are making an important
decision. Decide wisely.
