Characteristics of a Good Lender
HOME FINANCING GUIDE - Part 6
Brought to you by:
Steve Fingerman
Branch Manager
Allied Home Mortgage Capital Corporation
This section of the Home Financing Guide gives you information on how you can identify and choose a good Mortgage Lender. Finding A Good Lender can be one of the most important decisions you make in the home buying process. This guide will give you the information you need in order to make informed decisions about what type of lender you should and should not deal with. For more information, please contact me any time at 727-946-0904.
Steve Fingerman
Choosing a Mortgage Lender in Florida and is something that you should not take lightly.
We have all heard about the subprime lending crisis and seen some of the articles about consumer abuse at the hands of unscrupulous or incompetent lenders. Much of the recent problems with the US economy stemmed from problems with lending and the real estate market. So this is not a subject that should be taken lightly. The good news is that most of the lenders today are much more reputable than some have been in the past. But, is still important to find the right lending professional who will work closely with you and give you a high probability of success. The Guide below will clarify some of the key differences between Lenders, Banks, Brokersetc and should give you a pretty good reference point in how to determine what is best for you.
Banks, Brokers, Mortgage Bankers, what is the difference?
Banks offer home loans and many people look to them because they already have an account there. However, banks usually offer a limited number of mortgage loan programswhich for some may not meet their needs. Their lending staff typically is less experienced than other kinds of lenders and are not required to be licensed or required to prove competency. Usually the buyer ends up working with a junior person but the real experts are back at corporate or at a remote loan processing center not readily available to work with the customer directly. The bank's desire to keep staffing at a minimum usually translates to longer processing times and possible delays in getting your loan done. Another key area to be watch out for in dealing with The Bank, especially Big Banks is that often times a borrower will get a preliminary Itemization, or "work sheet" rather than a Bona Fide Good Faith Estimate. On that preliminary disclosure you may see something that looks like this; "These figures are preliminary in nature based on initial information and not full application, borrower will get actual costs and figures at time of application which may be higher or lower than the fees listed here based on the actual application". If you see anything that is even remotely related to this, a huge red flag should go off. Many Banks consider "official application" as the time which you actually pay an application fee. Only then will you receive a Bona Fide Good Faith Estimate, and only then will you know the true cost of the loan. In many cases, the GFE figures you receive once you pay an application fee will be significantly different than the initial "Itemization Work Sheet" you received from the Bank. Not all banks are doing business this way, but with lending tightening up over the last few years we see more and more that application fees are being required before an actual Bona Fide GFE will be given to a borrower, anything prior to that is essentially meaningless and is always subject to change. Be careful of these situations, you may find you are out $300-$400 dollars before finding out the real terms of your loan.
Brokersoffer many different loan programs and tout that they ‘shop to get you the best rates'. But in many cases they may just be middlemen who take your loan application, find a wholesale lender and then ‘markup' the loan to retail rates and add their fees to increase their profit. The lender they place you with actually does a lot of the work including loan underwriting and closing. There becomes a lack of control of the process for the Broker which can translate into delays in getting your loan approved and funded. They are required to be licensed but they are on their own for continuing education and training. Also with the new regulatory and financial reform some of the disclosure and compensation rules for Brokers have changed dramatically. Some of these changes prohibit a broker from being compensated by the lender and the end result on some loans may be that you are paying higher fees than if you were dealing with a direct lender.
Mortgage Banks can also broker loans if some unusual program is needed but they offer a large number of loan programs of their own which covers most scenarios. They process, underwrite and fund their own loans just like the big banks. But the big difference is the experience level of people you work with and the service you get. In general their employees do their homework. For example you are not just given a ‘prequalification' to buy a home but rather you are given a ‘pre-approval' that means something; your loan won't go sideways at the last minute and you truly know what you can afford. Good Mortgage Banks have very competitive rates and fees. It can be the best of all worlds.
What should I look for in a Lender?
You will need to evaluate your Lender just as you would any other professional. Consider these factors:
- Reputation - How long has the company been in business? Is it an established business that has made it through the ups and downs of the real estate market?
- Experience- Is the Loan Officer a seasoned professionals. Is he/she knowledgeable, do they know their loan products, are they familiar with the challenges and special loan scenarios you may present? Experience counts for a lot in today's lending environment. Also new national Licensing standards called the NMLS or National Mortgage Licensing System applies to all Mortgage Banks, and Brokers as well. These licensing standards now require extensive background checks, credit worthiness, and rigorous testing. This is also something that is not required from employees are large FDIC Banks, so proceed with caution. The odds are that the Loan Officer at the Large Bank is not nearly as educated as the Mortgage Banker or even Broker.
- Service - Is the Lender helpful and do they provide information freely. Did they get back to you right away and do they return your calls promptly? Or do you only hear from them up front and then do they disappear from sight?
- Product Selection- Does the Lender have a broad offering of loan products to choose from? Do they take time to work with you to find the loan that suits your specific needs? Not all loans are created equal and a good lender should discuss not only the benefits of different products but also the short comings, this way you are better equipped to make an educated decision.
- Professionalism- Is the Loan Officer licensed? Are they transparent or do they seem to not be forthcoming? Do they operate in a professional manner? Are the disclosures you are receiving Bona Fide disclosures that meet all of HUD's new requirement? Be wary of any lender who does not immediately offer a Bona Fide Good Faith Estimate. Under new regulations, once a GFE is disclosed there are very few items that can change and the change must be within a predicated tolerance (usually 10%). If changes exceed those tollerances, the lender and NOT the borrower is responsible for those changes once the GFE is issued.
- Support Staff - Does the Loan Officer/Processor have direct access to other professional support staff? Do other members of the lending team display the same positive characteristics of the Loan Officer? Are things well coordinated and do they work as a team.
- Integrity - Do the loan terms and costs seem reasonable and fair? Are they willing to tell you the "bad news" along with the "good news"? Do they stand behind their word?
- Disclosure - Has the Loan Officer given you the required disclosures up front to look at which includes among other documents the Good Faith Estimate and a Truth in Lending disclosures? Are those forms filled out or do they appear to pretty much blank? Do cost figure appears reasonable?
You need to look for a Lenderwho will give you a feeling of Trust. Ask for a list of satisfied customers. Be wary of any offers from that lender that sounds too good to be true or sounds too easy, unfortunately it is never quite that simple.
Allied is a Mortgage Banker.All Loan Officers in the company are required to be Licensed. All underwriters that underwrite FLorida Loans also have to be licensed, as well as even our Processors. We have a wide variety of in-house loan products to choose from and we are also able to broker those loans which fit a unique scenario that most Lenders do not handle and some Banks may not offer. For more information about Allied and the loans we offer, or for more information on the right research you should do before choosing a Lender please call me and I will be more than happy to assist you. Even if you do not choose Allied as your lender, I will still be happy to give you as much information as possible so that you know you are getting the best possible loan and at the best possible terms. We are in your neighborhood and have a vested interest in making sure our neighbors are getting the best loans, at affordable terms that are going to fit your needs for years to come. The last thing we want is to see another neighbor loose a home to foreclosure because they didn't get the right type of financing or were put into an unaffordable situation. Rest assured, our best way to success is to protect our borrowers interests which in turn will ultimately protect our as well.
Steve Fingerman
Branch Manager
Allied Home Mortgage Capital
4117 Mariner Blvd.
Spring Hill FL, 34609
Office 352-688-7949
Cell 727-946-0904
President
NMLS #276682
4117 Mariner Blvd
Spring Hill FL, 34609
Office 352-688-7949 Cell 727-946-0904
