Tips & Advice on Choosing an E-Lender/Broker
WHAT TO AVOID - WHAT TO LOOK FOR!
E-Lenders/Brokers who are solely web-based. These include mortgage sites that promise you three to four quotes on your loan.
Lenders that will not give you their loan officer’s last name, cell phone or home phone number. Many companies pass your loan from person to person. This can lead to numerous problems and miscommunications. You want to work with one loan officer from start to finish. You are entitled to know how to reach the loan officer to discuss your financial matters and to answer any questions that you may have. This includes after hours and on the weekend. Make sure you obtain their phone numbers and email address
Check your Lender’s Performance Record. Take the time to check out the Lender/Broker that you have chosen. This is easily done by contacting your local Better Business Bureau (www.bbb.org) or your states Department of Financial Institutions. You want to make sure the company you choose is authorized and properly licensed to do business in that state: http://www.bankersonline.com/sbd.html
OUT of State Lenders/Brokers. Most Lenders/Brokers do business in more than one state (check and see if they are licensed – see above). Should you be concerned? Where the Lender/Broker is located should not pose any problems for the borrower. The majority of mortgage business is done by email, fax, and over-night delivery. Appraisers, title companies, and loan processors are familiar with local conditions and applicable situations.
“Good Faith Estimate (GFE)”- make sure you receive an accurate GFE within 3 business days of the loan officer taking your application. The easiest and most concise way for you to know what you are being charged and what your payments will be are the GFE and the Truth and Lending Statements (TIL). If you do not receive these in a timely manner, find another Lender/Broker. Take the time to go over the GFE in detail. If there is an item on the GFE or TIL that you don’t understand or feel is inaccurate, ask questions. If you still don’t understand, ask again. If a loan officer talks in ‘mortgagease’, find another loan officer. Remember, things change and when they change your Lender/Broker should re-disclose and issue a new GFE and TIL. Insist that you have a copy of the closing statement (HUD Settlement Statement) well before the actual closing. There are circumstances that can sometimes make it impossible to obtain a copy of the closing statement before the closing. In that event, you have 3 business days to go over the signed paperwork in detail and if you are not satisfied, you may rescind (cancel) the loan. This is the time to review what you were promised and what was actually delivered. If something is not right or to your liking, talk to the loan officer and/or his boss. Still not happy – rescind! Don’t worry, they will be more than happy to still do the loan and start the process over.
Understanding Fees. One practice to look for on Good Faith Estimates is the practice of underestimating fees. Areas of concern are the prepaid costs (Interest per diem (day), real estate tax pro-rations, insurance pro-rations). If these are understated initially, it looks like you are either receiving more money from the refinance or bringing less money to the closing if the transaction is a purchase. Since no one knows for sure when the transaction will actually close, the pro-rations on the initial application should be based on 15 days (this is a middle of the road approach). If the loan officer has understated these dollar amounts, you may find him trying to blame the final Lender rather than taking the blame himself.
Real Estate Agents like to use their in-house mortgage companies. Many real estate agents and companies have their own mortgage companies. Besides wanting your business so they can make a profit, they want to control the transaction. They are concerned about any outsiders looking at the real estate transaction itself and finding reasons why it might not be in your best interest. In addition, their primary goal is seeing that the real estate transaction is consummated; not necessarily if you are receiving the loan that is right for your circumstances. Suggestion: competition is great - obtain a quote from their company then obtain a quote from another Lender/Broker. Make sure however, that each company is quoting the exact same product – loan amount, rate, term, prepayment penalty (if applicable), etc.
Rates Change - Should They? You are promised a rate on the 1st of the month and by the 15th of the month you receive a phone call that the rates have changed and it’s for the worse. Rates change and that is a fact of the mortgage loan world. You need to know what you can do to protect yourself. First, when you are quoted a rate remember that rate is quoted for that moment in time only and is based on information known at that moment in time. When the time changes or if the information changes, the rates can also change! In order to protect yourself you need to see if you can lock the rate and/or how long the rate is guaranteed to be available to you. Always make sure you have what has been promised to you in writing. Not all companies will issue a written rate guarantee; look for one that will issue such a guarantee.
