ADDRESS

8915 S Keystone Ave Ste C
Indianapolis, IN 46227

PHONE

317-657-8059

Buying a house, how do I chose a mortgage lender?

When shopping for a mortgage lender, the first and only thing most buyers do is ask about the interest rate. When they find the lowest, they use that lender. I am here to tell you that while the interest rate is important, there are many other factors to consider when choosing which mortgage lend will finance your new home.

The first thing I want to point out is that how much you pay for your mortgage in total is going to be decided more by your fico score, the amount of the loan, the length of the loan and a couple of other minor factors than who you get the loan through. The reason for this is that when one bank offers a lower rate to the same customer as one that offers a higher rate, they supplement the loss of income by charging higher fees or buy directly having the buyer purchase “points”. So at the end of the day, your lower rate could end up costing you more than you think. That said, sometimes the lower rate does cost less all around but when you are purchasing a home there are more important things at play than what amounts to $25 or $30 on your monthly mortgage payment.

The thing that people frequently don’t consider is whether or not the lender will be able to bring the home loan to close within the terms of the contract, how long it will take them and how many complications they will bring to what is an already stressful process. I am going to approach this article from that viewpoint more than a “shopping for rates” standpoint, because as a Realtor (and especially as a real estate agent in this hot Indianapolis market) I know how important it is to my clients that their home purchase goes smoothly and actually makes it to the closing table.

We will begin by eliminating “online lenders” from the equation. While they may be useful for getting good rates on a refinance, they are quite frankly too inaccessible (in my opinion if you cannot walk into an office and actually talk to a person face to face then the vendor is too inaccessible for a purchase as large as a home) to be of use in the home buying environment.

The next group of potential lenders I would like for you the home buyer to immediately dismiss is traditional banks. Again, they are potentially going to have better rates, but they are just not structured to move through the home loan process efficiently. Well it is efficient for them, but not for the home buyer. You see, when a company offers multiple financial services like a traditional bank does, they end up having layers of bureaucracy between the specialists who actually work on your loan. This causes files to get misplaced, mishandled and misrouted. The result of those things is processes that should take hours or days at the longest drag out for weeks and that is when there are no problems. If an issue does arise, even when a traditional bank is at its best… they will almost always end up taking longer than the 30-45 days your purchase agreement gives for you to acquire financing…and if you are in a hot real estate market like Indianapolis currently is, 45 days is too long to request for financing and expect to have your offer accepted.

So that leaves us with specialized mortgage lenders large and small. If you use one of the larger mortgage lenders, ask yourself if they are part of a traditional bank. If they are, then treat them as the paragraph above. Sure, they are better structured than a traditional bank for handling mortgage loans…but at the end of the day they behave exactly the same. Every person involved in the transaction works out of separate offices, they have too many layers of bureaucracy to respond to problems that arise and quite frankly they will not offer you the level of service you will get at a truly specialized mortgage lender.

From that point, the size of the institution is more or less moot. I personally believe that smaller companies do a better job on the whole, but I know of at least one larger home finance company that does an excellent job. So my preference for smaller lenders has more to do with who I have built relationships with. By relationships I don’t just mean vendors who I socialize with, but the ones who I have worked with and KNOW the level of service that I demand for my clients. The ones who deliver it. The ones who I know I can call at dinner time and say “WTF?” when something is askew and I can be confident they will fix the problem.

And that brings us to the crux of the answer for who a home buyer should use to secure a mortgage. Talk to your Realtor. They deal with the lenders in your area and know who handles what well and who doesn’t. If you really want to know that you are going to get a high level of service and your home is going to close on time…

Call Robb at 317-657-8059 or email me at robb@yourrealtylink.com to set up a consultation and I will ensure you get the service you deserve.

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