What to do now
Talk to your network of advisors — friends, relatives, or others whom you trust — about how they chose their mortgage lender
Ask your advisors: What were the criteria that were important to them? Are these criteria also important to you?
- Ask for recommendations. Your advisors might recommend a specific lender or loan officer, especially if the advisor lives near you. Or they might recommend a method for finding a lender.
- Don’t just ask for names and numbers. Ask your advisors why they liked a particular lender or loan officer. What was important or comfortable for them may not be important or comfortable for you.
- A housing counselor can also be a good resource to help you figure out how to identify lenders.
Make a list of potential lenders
In addition to your advisors’ recommendations, there are many ways to find potential lenders. Contact your local bank or credit union and others that serve your area.
Contact at least three lenders on your list
Don’t stop with just one lender! By exploring your options with multiple lenders, you get more information about your options and get a sense for which loan officers you might feel most comfortable working with. Call each lender to set up an appointment to meet with a loan officer.
At the appointment:
- Share the basic facts about your situation and the kind(s) of loan you are considering.
- Ask the loan officer whether your plan makes sense to them, or whether they might recommend something a little different. If they recommend something different, ask why.
- Ask the loan officer to show you the interest rate, APR, estimated fees, and monthly payments for a couple of different loan options.
- Ask the loan officer to look at your documents and help you understand whether there are any reasons you might not qualify for the loan options you have discussed.
What to know
You’ll get the most value out of these conversations if you bring documentation with you
Lenders have very specific guidelines about how they count and document your income, assets, and the source of your down payment funds. An experienced loan officer can help you spot potential issues and suggest ways to address them. If your application might be complicated – for example, if you are self-employed – it’s best to find out sooner rather than later. Seek out lenders who are willing to go over the details with you.
You can decide whether to allow a lender to check your credit
A loan officer may ask for permission to check your credit. Knowing your credit score allows the loan officer to give you accurate pricing information about different loan options. An experienced loan officer can also help you check your credit report for errors. However, a lender’s credit check can show up in a future credit report and can result in a slight dip in your credit score. Within a 45-day window, you can have multiple lenders check your credit without any additional impact on your score. Learn more about what to consider when deciding when to allow a lender to check your credit.
You can work with either a lender or a mortgage broker to get a mortgage
You can meet with both types of companies at this stage to get a feel for both options. Learn more about the difference between a lender and a mortgage broker. For simplicity, we use the term “lender” or “loan officer” to refer to both lenders and mortgage brokers.
How to avoid pitfalls
Only work with loan officers who make you feel comfortable asking questions
A loan officer’s answers should make sense and help you understand your choices.
- If a loan officer makes you uncomfortable, can’t answer your questions, or is too pushy, look for another lender that is a better fit.
- As you move through this process, always make sure to check that the paperwork you receive matches what the loan officer tells you. If it doesn’t, ask questions. If the loan officer is unable to answer your questions, consider working with a different lender.
- You can check to see if a loan officer is authorized in your state. Most are listed in thisloan originator database .
Keep your options open
Don't decide on a lender at this stage! Wait until you have specific loan offers that you can compare before choosing a lender. You’ll get the best deal that way.
Credit discrimination is illegal
Under the Equal Credit Opportunity Act, it’s illegal for lenders to base credit decisions on certain factors such as race, religion, marital status, national origin, receipt of any sort of public assistance, sex, or age (as long as you are old enough to enter into a contract). Learn about the different kinds of loans available and contact a variety of lenders, including local banks or credit unions.Learn more about illegal credit discrimination .
Certainly! Let me dive into this topic with a mix of enthusiasm and expertise.
Firstly, let's talk about the importance of seeking advice from your network of advisors when choosing a mortgage lender. Trustworthy recommendations from friends, relatives, or others who have gone through the process can provide invaluable insights. The criteria that were crucial for them might align with your priorities. However, it's essential to delve deeper and understand the specifics of why a particular lender or loan officer was favored.
Now, when making a list of potential lenders, it's wise to explore various sources, including local banks, credit unions, and recommendations from your network. This diverse approach ensures you have a comprehensive view of your options.
Moving on to the critical step of contacting at least three lenders, this is a practice rooted in gaining information and assessing comfort levels. Meeting with loan officers allows you to share your situation, discuss loan options, and understand the associated terms such as interest rates, APR, fees, and monthly payments.
One of the key takeaways is the importance of documentation. Lenders have specific guidelines for income, assets, and down payment funds. Bringing the right documents ensures a more fruitful conversation and helps identify potential issues early on.
Regarding credit checks, understanding when to allow them is crucial. While it may result in a temporary dip in your credit score, within a 45-day window, multiple checks from different lenders won't impact your score further. This knowledge empowers you to make informed decisions about when and with whom to share your credit information.
The article also touches upon the option of working with either a lender or a mortgage broker. Both have their merits, and meeting with representatives from both types can help you decide which aligns better with your needs.
A critical piece of advice is to only work with loan officers who make you feel comfortable asking questions. Clear, understandable answers and a comfortable working relationship are key indicators of a good fit. Always cross-check paperwork with the information provided and ensure transparency throughout the process.
Lastly, the reminder to keep your options open until you have specific loan offers to compare is a strategic move. This approach ensures you secure the best deal for your unique situation.
Remember, credit discrimination is illegal, and understanding your rights under the Equal Credit Opportunity Act is fundamental to a fair and unbiased lending process. Exploring different loan types and contacting a variety of lenders, including local institutions, is a proactive step in avoiding discrimination.
Hope this breakdown helps! If you have more questions or need further insights, feel free to ask.
