When buying a home, selecting a mortgage lender is a big decision. Many home shoppers opt to use a lender that’s recommended by their real estate agent, but that doesn’t guarantee you’ll get the best rate, or that the lender will have experience in loans for your unique scenario. If you want to find the best loan for you, we recommend talking to at least three different lenders when shopping for a mortgage to compare loan options.
Of course, you’ll want to compare official Loan Estimates to see which loan makes most sense for you and your family, but you’ll also want to interview your contending lenders to see if you’re comfortable working with them. Not sure exactly what to ask? We’ve compiled this list of questions to help you in your interview process.
For the lender:
A mortgage lender is a licensed professional who gives you the money to fund your loan, either directly or through a third party. Lenders include institutions like banks, credit unions and public or private finance companies.
- Are you licensed by the state?
- How long have you been originating loans?
- Whom do you represent-a bank, broker, finance company?
- What types of loans do you offer?
- For a reverse mortgage, who will I work with after closing?
- What are the loan application/approval process fees?
- Are you going to hold this loan or sell it?
- How do you keep my personal information secure?
- Will you sell my information?
- How can I reach someone after hours?
For the mortgage brokers:
A mortgage broker is like a matchmaking service. They review your personal financial information and try to match you with a lender who will give you the best rate and terms.
- How do you get paid?
- How much will you make on this loan?
- Who are the top lenders that purchase loan applications from you?
About loan rates:
- What interest rate are you offering, and how did you arrive at it?
- Is this the best rate you can give me?
- How will the rate change over the life of the loan?
- What is the highest my ARM (adjustable rate mortgage) rate can go?
- How long will you lock in my rate? What does the lock cost me?
- Can you explain an annual percentage rate (APR)? What is it for this loan?
About loan costs:
- Will you give me a fee sheet or estimate of funds to close?
- Will you explain my good faith estimate (GFE)?
- What am I paying in points?
- What are my monthly payments?
- Do I need to pay private mortgage insurance (PMI)?
- Are there any prepayment penalties on this loan?
- How long will the loan take to close?