Shopping for a Lender
A very important part of purchasing a home is finding the right lender. Below are some characteristics you should look for when choosing a lender.
We will make recommendations to you for lenders and other services. Please be aware that we cannot and do not receive referral fees, kickbacks or compensation from ANY of these business contacts. We use certain resources only because they provide consistent, superior service, get the job done, and deliver on time.
THINGS TO KNOW ABOUT LENDERS:
- Some actually loan money, while others are "brokers" who find a company to loan you money. Neither is especially better or worse, but carefully review fees either may charge. Even if you borrow directly from a lender, some will keep your loan in their portfolio, while some will not. In other words, it is common for a bank to sell its loans.
- You will be quoted an interest rate, but this is NOT the real rate. The Annual Percentage Rate (APR) should be the rate you consider when evaluating loans. APR includes the base interest rate PLUS all fees the lender will charge you, spread over the life of the loan. This is the true cost of the loan.
- Paying points to buy down your interest rate benefits you if you are relatively sure you will be in the home for seven years or more. A point is one percent of the loan amount. If you move in two years, you have basically paid the lender for benefits you didn't get.
- Borrowers with the best credit get the best rates.
- Not all lenders can provide all types of available loans.
- Communication is the #1 problem that I hear from both lenders and customers.
- Lenders will ask more questions than you think they should, and ask for more documentation than you want to provide. This is simply because borrowers have come up with ingenious ways of cheating them over the years!
Some are honest, straightforward, and good to work with - while some are not! Unless you have strong ties to a lender already, we suggest you use one of our recommendations. Not only will they do their best for you, but they also want to earn our continued referrals!
We use several mortgage institutions but the information that they require is fairly similiar. If you want a heads up on what a Louisville Mortgage Broker looks for, try here.