By Amy Stuhr Paterson
Getting a home loan can be a complicated proposition with its own unique vocabulary and crazy acronyms! “Points”…”closing costs”…”ARM (Adjustable rate mortgage)”…”APR (Annual percentage rate)”…It’s almost as bad as the military!
And while potential home buyers often concentrate on finding a REALTOR® and starting their search, locating the right mortgage lender should be at the top of your list because it can make or break your home buying experience.
Amy Stuhr Paterson, “A-Graded” NBKC Bank Mortgage Lender on PCSgrades, offers her expert advice on what questions to ask when looking for the right mortgage lender. And she encourages you to look at more than just the rates!
So, you have decided you want to buy a home! An exciting but sometimes daunting proposition!
One of the first steps in the home buying process is to select a lender who will offer more than just a competitive rate and fee pricing, but also keep your best interests in mind.
Where to start?
The easy answer is to start by comparing rates using the same scenario for each different lender.
Rates often vary from day to day or even morning to afternoon, so try to compare rates quoted around the same time. However, it is probably even more important to ask each lender the following questions beyond quoting a rate to you.
Ask about the intangibles
- How familiar are the lender and the underwriting team with working with military borrowers? You don’t want to have to explain what an LES is or why your W2 might look skinny in years you were deployed and didn’t have to pay taxes, etc.
- If going VA, does the lender often work with VA loans, and do they have VA delegated underwriters on staff? A Lender with prior experience working with the VA loan is often easier to work with if using this benefit.
Be Prepared and Ask Lots of Questions
Let’s say you are looking for a lender to help you finance a $250,000 home in Texas using your VA eligibility with no money down and a 30 day closing. Here are the questions I suggest you ask each lender:
- What are the Rates? (Using a scenario similar to the one noted above: Texas, $250K purchase price, 30 day close, no money down)
- How quickly can the lender close a loan for you? Some VA lenders are very back logged and can take a minimum of 60 days to close. That may not work for you if you have a purchase contract with a 30-day closing. If the lender can’t close in 30 days, what is their minimum turn time from loan origination to closing?
- Are there any points charged with the rate quoted? Points are a percentage of your loan value charged by a lender for the rate offered. For example, 1 point = 1% of your loan value so this can be quite pricey!
- Does the lender charge Origination or Broker Fees? For example, some lenders charge a 1 point origination fee (1% of your loan value paid at closing) just to originate the loan. On top of that, you will have all the standard 3rd party closing costs like appraisal, title charges, recording fees and pre-paid expenses (interest, taxes, and insurance).
Asking for the above information will provide a meaningful “apples to apples” comparison between all the lenders you are considering.
Once you choose a lender, the next step is to start the Pre-Qualification process to confirm your eligibility to buy a home, and then go to PCSgrades.com, find a realtor and go out and buy the house of your dreams!