It is a common myth that all Mortgage Companies and mortgage pricing are basically the same. Price and service can vary drastically from lender to lender. But where to begin then? The thought can be overwhelming and make you apprehensive.
There are several different types of Mortgage Lenders. Banks, Credit Unions, Large Retail Chains and Mortgage Brokers.
Banks and Credit Unions
Banks and Credit Unions perform a variety of services and Mortgages are only one of them. They have the best chance of catching your attention because you are in the bank conducting your other banking business. It certainly doesn’t hurt to check with your bank for one of your options but since the price could be higher due to higher overhead it is a good idea to get a second or even third opinion.
Large Retail Chains
Large retail chains are focused on just mortgages and are another option. They also tend to have higher overhead and a higher price but that can vary from branch to branch.
A Mortgage Broker is a home loan company that has home loan options available from a variety of different lenders. The Mortgage Company has wholesale relationships with many lenders which often include local banks, large retail chains and lenders only available to Brokers.
Since the Mortgage Broker can set their own compensation and usually have less overhead, they often offer a lower price for their loans. They can also shop your rates for you within their lender mix to get the best price for you for your particular financial profile and loan type.
Most Mortgage Brokerages are locally owned which can be a benefit as well.
How to Shop
When you are shopping for your mortgage and your mortgage professional you should focus on the things you would look for in any professional relationship.
Trust is important in any relationship whether personal or otherwise so working with someone you trust is paramount. How does a home buyer determine if someone is trustworthy? If this person was referred by someone you trust then that is a good start. You can also ask yourself if you feel this person is focused on ‘selling you’ something or on educating you about what they offer in order for you to make the best decision for you.
Is this person transparent with their pricing or are there hidden fees? If you listen for it during an interview you can tell if someone is using sales tactics to divert your attention away from the rate and fees you are going to pay. Notice if they are open about pricing and the loan process and genuinely want to give you a great experience. Read their reviews and notice how many they have.
Mortgage Price quotes can often be confusing and hard to compare. Choose a Loan Officer who will take the time to explain the breakdown of a price quote and what to look for when comparing.
If a Loan Officer discourages you from shopping for your rate that is a red flag. The Consumer Financial Protection Bureau requires that the credit bureaus not lower your credit score if you have multiple mortgage credit pulls within a 30 day period to encourage shopping for your home loan.
Educating yourself on rates, common fees and loan types before meeting with your Loan Officer is a great idea.
DC Lending, a locally owned Mortgage Company in Vancouver, WA offers a free home buyers guide on their website.
Stay tuned for Part III on How to Get Pre-Approved for a Home Loan.