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When choosing a lender, whether you are buying or refinancing, the initial impulse for many people is to look for the lowest interest rate possible. Yes, the interest rate is very important, but the truth is that lenders these days offer very similar rates, so other factors may be even more significant. To pick the right lender, it's not a bad idea to call up a few and quiz them a bit. Here's what to look for…
Is the loan officer straightforward when talking to you? Good loan officers will answer your questions in plain English instead of using "lender lingo." They will also answer your questions directly, rather than being intentionally vague. Is the lender showing genuine interest in helping you by asking you questions about your particular situation? Are they listening to you? Or are they just fast talking about low interest rates and "no fees?" A good lender will listen to your needs, then offer you the loan that best suits you. A bad lender will quickly give you a bunch of empty promises, and leave you wondering whether or not they can deliver.
You should get a clear picture of the total cost of getting the loan. A good lender should have the answer pretty much memorized. Ask what the total closing costs and fees are likely to be. Again, look for a direct, clear answer. If they give you a wide range like, "Oh, somewhere between $1500 and $3500," run for the door. A good loan officer will also provide you with a Good Faith Estimate (just ask). This is a written list of costs your transaction is likely to incur, and it can be quite helpful when comparing lenders.
Find out if and when you can lock the rate. Typically, the rate can be locked in periods of 14-90 days. Some loan programs allow you to lock the rate as soon as you apply for the loan; some require you to be fully approved first. The rules can vary, so ask. When locking the rate, make sure to get it in writing. A good lender will have no problem with this.
Great loan officers are competitive. Don't be afraid to ask your lender to beat or match an offer you've received elsewhere. If they wants your business, they will try hard to get you the terms you want. If they can't, they should be able to explain why (maybe the lower offer you've seen somewhere else has hidden costs, or some special requirement you can't meet).
And where do you find great lenders? Ask your friends and relatives for referrals.Ask your real estate agent. A Realtor can be a great help, since Realtors interact with many different lenders and can direct you toward the really good ones.
A great loan officer, like a great real estate agent can be a valuable asset for you. Choose carefully. And if they does a great job for you, repay them by referring your friends and relatives to them.
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