Selecting a mortgage broker to work with on refinancing your home or obtaining financing on a new Houston-area home purchase can be a challenge.
There are a number of criteria that are important to any consumer such as service, pricing, and convenience. But how do you evaluate a mortgage lender on these standards?
Some consumers will automatically visit their bank to obtain mortgage financing, but using them is far from a guarantee that you will receive the best rate or the best service. Keep in mind, the big banks are only representing their own mortgage products, not programs or pricing that is available by other institutions in the wholesale marketplace. Furthermore, when mortgage volume gets high, as it has recently with the large number of refinances, the time to get a loan approved and closed with a large bank goes up dramatically. I have heard from more than one consumer about having to wait three months to get their loan closed.
Other people will simply look for the best rate they can find. This strategy is also not without its pitfalls. While many unscrupulous lenders have left the business in the wake of the mortgage meltdown, there are still some out there who will promise the world and then rarely live up to their word. Often, the lowest rates are offered by lenders who cannot compete on other metrics so they simply try to win your business based solely on rate. This might result in increased closing costs or an inability to promptly return phone calls.
When evaluating mortgage brokers in the Houston area, there are some minimum criteria a consumer will want to consider. First, do some research with the Better Business Bureau www.BBB.org. A good mortgage lender should have a minimum rating of “A”, and even better, be an Accredited Business. This indicates that the BBB has done some additional research on their backgrounds and licensing. In the mortgage industry, the importance of service cannot be stated enough. You can have the greatest rate in the world, but trying to get a loan closed through an incompetent lender can result in delays, frustration, and the possibility that your loan will never close. In addition to investigating the lender, you should also do some research on your loan officer. Check out social media sites like LinkedIn for their background and reviews.
Second, although not the only factor, remember that rate is important. A lender’s quoted rates should be at or below the national averages which can be found weekly on a number of web sites including http://www.freddiemac.com/pmms. You can also check your local newspapers – The Houston Chronicle Sunday Edition has rates posted in the Business section every week. This is a survey completed by a local research firm who does not charge the lenders for appearing in the survey. Keep in mind that, often, rate surveys show lagging rates, meaning those from a few days to a week ago and can be misleading in a rapidly changing rate environment. Also understand that national marketing firms, like LendingTree, charge a fee to the lenders wanting to appear in their system and these fees can be exorbitant. Many local mortgage brokers and bankers would rather pass savings onto their clients than pay a national marketing firm for a lead.
When obtaining a rate quote, be sure to request a Good Faith Estimate, as this document makes the quoted fees associated with your rate quote binding for ten days. You should also make sure that any rate quotes you receive are within the same day so that you are comparing apples to apples and not giving one lender an advantage of providing a quote after the market has improved.
Lastly, when possible, work with a local lender. While they may not have the marketing power of national lenders, and thus the ability to put television ads in front of you constantly, going local supports your community, and you also have the comfort of knowing that there is a local office you can visit if the need ever arises.
Choosing from whom to obtain a home loan is one of the most important financial decisions a person can make. It is imperative that any homebuyer/homeowner do so with as much knowledge as possible.
