How do you know what lending company to go with?

Question

My husband and I are in the process of buying our first home. A realtor recommended a loan agency to us to get our pre-qualification letter. I can't find any information on the internet about this company. She wants to meet with us tomorrow night (in her home I might add). I'm extremely leary just handing over all of my personal information to just anyone. My parents told me I need to just get my loan through a bank since chances are, they'll buy the loan anyway, but my husband says that this woman will work just fine for us. (I think he is being a little naive about this though). How do you know if you're working with a reputable lender or if I should get away before it's too late? DOes it seem weird that she wants to meet with us in her home as opposed to an office? Is there anything I should keep an eye on or pertinent questions I should ask her during our meeting?
Please help!!

Answer 1

Many Brokers work out of their homes- but having you meet at her home instead of meeting you at yours seems a little strange. Realistically, you will get a better loan through a Broker than you will dealing directly with the bank as we get wholesale rates verses the retail rate the bank will offer. But, I would agree your realtor is probably getting a kick back for recommending this particular person which will inevitably get passed on to you to pay for. Look at the 800 section of the GFE- this is the top section. It will outline all the costs that are going to the broker and the lender. Normal things would be origination fee, processing fee, underwriting fee, appraisal fee, tax service fee, and flood certificate. If you see things other than this- be very careful about it. Never pay more than a 1% origination fee and never pay an origination fee and a broker fee or discount fee.
Your best idea would be to get quotes from other brokers/ lenders and compare the 800 section of the GFE and the actual rate. Many unscroupulous originators will short some of the other costs on a GFE to make themselves look cheaper- but the reality is that anything outside of the 800 section on the GFE will be the same regardless of who you choose to go with.

Answer 2

The most important thing to do is shop around. Tell the lady who wants to meet with you that you are looking around for the best deal. Remember this is a big financial decision and worth the extra time to look around. Do not tell the lenders what other lenders are giving you just let them know you are looking around so they will give you a better deal. If you tell them what the other is giving you they might give you just a slightly better deal. Don't go overboard but check with at least 5 different companies. Once you have shopped the first company ask them what your middle credit score is. This is the score 99% of banks use to give you a loan. Do not allow everyone to run your credit unless you have judgments, late payments or collections because this information will be important to them. Tell each lender your score and they should be able to give you the details of what they can offer you. They might say they need to run the credit first but say nevermind then. They will usually say ok, let me see what I can do. They will give you an answer usually within a half an hour. Once you find the lender offering you the best deal get an approval through them by faxing your information to them and ask for their good faith estimate. Check bbb.com to see if their are any complaints on the company. Remember its mortgage so they might have a few. It's normal because of the line of work they are in. Here are a few recommended sites to shop.

eloan.com
countrywide.com
wamu.com
lendingtree.com
nationalcitymortgage.com
your local bank

Good luck

Answer 3

A pre-Qualification is worthless. It only means you are alive and have some kind of job. What you need is a pre-APPROVAL letter. I send some buyers to a mortgage co I know will issue a pre-approval at the drop of a hat. Then I send them to a regular bank. I do this because some sellers only want pre-approved to see their houses and the amount the co gives on the pre-app. is real close to reality. I always black out the amount when I show it to a sellers agent so they don't see what my borrower is approved for. It aggrevates them to no end but I am just protecting my buyer.
That having been said----Some agents work from their homes and I don't knbow what your local custom is so I can't say. Some of our female agents won't meet strangers in the office after hours alone so I can understand that part.
My biggest concern is your lack of trust in her. The personal info you "hand over" is limited and our confidentiality responsibility covers that.
Ask her if she is an Accredited Buyer Representative or a Certified Residential Specialist. These agents have taken special classes and passed a national test to be certified. We specialize in representing buyers. If she is not she probably can do a fine job representing you.
Go to REBAC.com and www.jackosullivan.net for more info.
Email me if you need.
Good Luck

Answer 4

There's nothing inherently wrong with a "mom and pop" shop. Working out of their house, they have very little overhead, so it's possible you could get a great deal. Unlike the banks, which have the biggest buildings in every city to pay for. It could just be that meeting after hours is difficult or inconvenient to do at her office, if she actually has one. I've met people at their own homes numerous times, never at my own though.

That being said, you have a responsibility to yourself to get competing offers. Find out from this loan officer what your middle credit score is, since that's what will be used to qualify you. Once you know it, call around to a bank or two, and another broker/mortgage company or two. You should be able to get a good-faith estimate from all of them, based on your credit score (they'll need income info to make sure you qualify too), and see how your agent's loan officer stacks up.

Make sure you compare closing costs as well as the rate offered. Avoid short-term ARMs if at all possible, as the fixed rate market is better right now anyway. And you have no obligation to use your agent's loan officer. If they can't get you your best deal, go elsewhere. If your agent doesn't like it, find another agent.

You control who you use. Don't forget that.

It's certainly possible that this gal will sell your loan to the same bank you got a higher offer from. Brokers should be able to beat the same bank they compete against, since they get their rates on a wholesale basis, and smaller brokers have more flexibility in fees they have to charge. Shop until you're satisfied. Get 3-4 good faith estimates (ideally on the same day), and sit down with your parents and compare them. You'll also get an idea of whom you feel comfortable working with.

Answer 5

I'd look carefully at a number of lenders and find out who charges the least.

You are looking for any origination points, and other fees. The only extra fees you should pay are things to external entities. For example, my municipality charges 60.00 to change deeds if a house is bought. That's fair. But anything about a "underwriting fee" is total BS, since that is part of their job to evaluate you as potential credit risk.

I would put a small sum of money that this person kicks money back to the realtor. I think it is worthwhile to find out what this person charges, then compare to bankrate.com.

Answer 6

Agents will always push you to use "their guy". Be careful.. don't give any money at this point, and get a second opinion. if you have your credit pulled, get a copy so you may show it to another Loan Officer to see what they have to offer.