So it’s time to buy a new (to you anyway) home. It’s like a broken record, “rates are at all-time historical lows“. You’ve selected the area and narrowed your search down to a few homes. Before you submit an offer, you need to talk to a lender if you haven’t already. How do you choose a lender? Where will find you the best deal?
Keep in mind that you need to look at the big picture to find the best deal. It doesn’t always come down to APR.
What to consider:
- The rate (APR) - dependent on your credit, the loan amount, and other factors
- Closing Costs – what it will cost you to close this loan and who pays it (you, the seller, or is it negotiable)
- Fees – different banks and lenders will have a different set of fees
- How Long & Likely They Are to Get You To The Closing Table
I’d like to go into this last one a bit because it’s special for our current market. Gone are the days of assuming that getting pre-qualified or pre-approved means that you will get the loan. There are a lot of lenders who can still talk the big talk, but are not walking the big walk. Don’t forget that the lowest rate is not the best deal if you loose the purchase after weeks or months of excitement. There are many lenders out there filled with empty promises, don’t set yourself up for such a heartbreaking situation!
What are your options:
- Mortgage Brokers - They will shop your loan out to find you the best deal for your unique situation, but these middlemen can also slow down your loan since they don’t have the inside track at the actual bank. They may not always know if a bank is lending money this month because it changes frequently in the current market. Do your own research even if you hire a Broker. Even Mortgage Brokers get stuck meeting condition after condition.
- Your Bank - If you have a great relationship with your banker, this is a great option. If their rates are competitive, you may sail through some of the verifications since you already have a relationship with them. However, if your bank is not one in a position to readily make residential loans, you’ll end up with the run-around followed by heartbreak. They won’t want to deny your loan but may keep it in underwriting until your frustration boils over and give up on them.
- Another Bank – If you can get a recommendation from someone who as just closed a loan (good Realtors can help a ton), they can give you the best advice on who is following through with their loans (and promises). Often times, dealing with the bank directly speeds things up greatly than when you go through a company that brokers deals out to different banks. The trick is finding the right bank.
What to look for
The best deal isn’t always just the best rate. Find a bank offering competetive rates and closing costs that is actually closing loans like yours in a reasonable time frame. Get recommendations from your Realtor, Title Companies, and ask your Realtor to ask their colleagues as well.
If you thought finding the perfect home was going to be hard, welcome to shopping for the perfect loan!
I am happy to give you my insight and recommendations based on what kind of loan product you are looking for. In this market, your lending resources are more important than ever.
