Who and Who Not to Trust When It Comes to a Mortgage Lender
A Home Buying Article Contributed by Robert Scalia
Who and Who Not to Trust When It Comes to a Mortgage Lender
Most borrowers will admit that they are anxious when it comes to picking the right mortgage lender.
The reason for this is simple: everybody out there want to make money from you. So who can you trust? The problem with the home mortgage market is that the information disparity is unusually large. Most borrowers are in the market only a few times in their life, and maybe only once if they happen to get lucky and come across the home of their dreams the first time around.
But this means that borrowers like yourself have only limited time to learn the rudiments of what can be an extremely complex transaction. The professional mortgage lenders who are sitting on the other side of the table, by contrast, know the nuances of every transaction in and out. They deal with these every day. So knowing who to trust becomes critical to your choices.
If you don't have trust in your mortgage lender, you will end up bouncing from one loan provider to another, wasting not only their time but your own. That's why most mortgage shoppers decide to turn to referrals to deal with the trust issue. They simply figure that if such and such a lender is good enough for their friend or acquaintance, then it's probably good enough for them.
Why You Should Think Twice about Referrals That Come from a Certain Type of Mortgage Lender.
Most referrals for a certain mortgage lender comes from real estate sales agents, builders and other friends who have managed to buy a home, and internet referral sites. But not all of these are equally reliable sources, and it's something you might want to think long and hard about before you make your decision.
Real Estate Sales Agents, for example, are among the largest source of referrals.
The borrower will usually have established some kind of relationship with the agent during the house-hunting phase. That agent is there when the need for a mortgage arises. Because sales agents have the same interest as buyers in getting deals done, they will almost always refer their clients to loan providers who can generally be depended upon to close on time.
What's more is that these agents usually have no comparable interest in the mortgage price. However, in order to keep you the customer happy and committed to his deal, he won't want the price from the mortgage lender he has in mind to be so far out of line that the borrower throws a fit and blames the agent.
You should also keep in mind that loan providers and mortgage lenders spend a lot of time cultivating the favor of sales agents, even if US law prohibits mortgage lenders from paying for referrals from agents.
Are Your Friend Really the Best Option When It Comes to Referrals for a Mortgage Lender
Friends will often be more than happy to point you in the direction of a mortgage lender who he or she recently used. You know the source of the referral is trustworthy and you know tat your fiend is not out there to make a buck off you, but that's not all you should be thinking about.
But you also have to bear in mind that your friend's opinion is really based on a single experience with a mortgage lender that might be skewed – especially if his transaction and yours are very different.
