How To Choose A Lender

iStock_000056690830_choosing a lender_Medium_600x400Once you have figured out which mortgage product – fixed rate or adjustable rate mortgage – is best for you, and whether or not to pay points, you are ready to begin comparison shopping for a lender. Interest rates, of course, are the first point of comparison. Be sure to compare apples-to-apples” — i.e. similar products at different institutions. Keep in mind that the advertised interest rate is only one measure of the cost of the loan. A better point of comparison might be the Annual Percentage Rate (APR) which is a measure of the total cost of credit, expressed as a nominal yearly rate.
You also want to ask the lender how long it will take to process your application, and its commitment policy. Ask about the lender’s rate-lock procedures. Will you have the option of locking in a rate or letting it float until closing? If you can lock in a rate, is there a charge? How long is the rate lock good for?

Other questions to ask: Who will handle the servicing of your loan after the closing? Most lenders sell their loans to investors in the secondary mortgage market. Will the lender sell your loan, and if so, will it also sell the servicing or retain the servicing?

It’s also important to check out the reputation of the lender. Getting referrals from friends and family about lenders they have used and been satisfied with is a good place to start.


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