Shopping for a mortgage lender is an important part of the homebuying process. Not all lenders are created equal, and the interest rate they offer you only tells one very small part of the story.
First and most importantly, in my opinion, you want a loan officer who is knowledgable, trustworthy, and -- this one is important -- communicative. A lender who doesn't call you back almost immediately may be showing you their true colors from the very start: if he or she isn't answering or quickly returning your first call may continue to do so throughout the homebuying process, and also may not promptly return the calls of your REALTOR® or the closing attorney, which can cause delays in your real estate transaction and, in extreme instances, put your earnest money at risk.
Second, of course, is the thing on every buyer's mind: what interest rate is the bank or broker able to offer for you. This is often based on your loan application, so don't be surprised if the lender can only quote you an interest rate once you have filled out an application and submitted your financial documents. (Click here for a list of financials you should expect any lender to ask for.) It's important to note that interest rates can and do fluxuate, so the rate the lender may quote for you today may change by the time you are ready to lock in that rate for your loan (i.e., when you have found a property and put a contract to purchase on that home).
Third, keep in mind, however, that the interest rate only skims the surface of the fees that a lender will charge at closing. Asking for an up-front disclosure of the lender's fees and any other costs to you associated with the loan is a very important step in the process. During this discussion, the lender may throw out terms like origination fee, processing fee, and underwriting fee when describing their fees -- all of these fall under typical closing costs associated with obtaining a mortgage loan in Georgia. In addition to your downpayment, the fees associated with purchasing a home are called closing costs, and a substantial amount of these costs are associated with the lender's fees.
(You may have read other articles or posts that claim that you can plan on your closing costs to be 2.5% to 3% of your mortgage loan amount: BEWARE of using this calculation, as it is not accurate. Using a generic figure like this, depending on your price point, is very misleading. Click here for a breakdown of typical residential buyer closing costs in Georgia.)
Every lender's fees are different, and knowing those fees can help you to make an educated decision when choosing a lender.
In addition to a complete breakdown of fees and costs associated with your loan and your closing, here are some other important questions you might ask:
- What types of loans are available to me? What type of loan do you think will be right for me? Do I have options?
- How many days do you need for a financing contingency? The lower the number of days, the more competitive your offer could be.
- Do you offer the option for me to get fully approved before I make an offer on a home? Some lenders will offer to put your loan application through underwriting and fully approve you, contingent only on finding a home and a successful appraisal. Click here for more about pre-qualification versus pre-approval.
- Are there any options to waive appraisal? An appraisal contingency protects you, but in a competitive market, some buyers who have the option to waive an appraisal, which is often based on your credit and downpayment structure, may have more competitive offers that are more attractive to sellers.
- Do you offer the option to lock my interest rate?
- Do you offer the option to float down my interest rate if rates drop after I have locked my rate?
- Do you handle underwriting in-house? If your mortgage lender outsources their underwriting, it's important to know how that will affect your closing timeline and your ability to close on time.
It's also important to note that every homebuyer is different, and you deserve to be treated as such. There is simply no one-size-fits-all in real estate! Both your REALTOR® and your mortgage lender become a part of your homebuying team and should not only work well and communicate with you but with each other. Look for professionals who take the time to get to know you and your real estate goals, and then who work to help you reach them!
If you are thinking about buying a home and have questions about working with a mortgage lender, please call us today! We can refer our trusted, knowledgeable lenders so that you can start that conversation with them. Call us at 404-994-2181 or email Ben(at)BuySellLiveAtlanta(dot)com
