Tips on Choosing a Mortgage Professional

As a licensed real estate broker, one of the first things I do when meeting with new clients is go over the real estate transaction process. I want to make sure that they understand my job as their representative, the roles of the other professionals involved-such as the mortgage broker, home inspector and escrow officer-and the process of a real estate transaction. I discuss with them how to best prepare for purchasing a new home-and have the best chance at getting a seller to accept their offer. And I stress to them that the number one way to be financially prepared is to have a pre-approval letter in hand before we even begin taking tours of homes.

The very first thing that I recommend to clients looking to purchase a home is, if they haven't already, to meet with a mortgage broker or lending company to begin the pre-approval process. In today's real estate market, most home offers aren't even considered without a buyer first being pre-approved for a lending program; a seller wants to make sure that the buyer is serious enough to do their due diligence ahead of time. Besides, it doesn't pay to get your heart set on a home without first knowing exactly what you can afford.

Sometimes clients look to me for referrals for mortgage professionals and, if I can, I'm happy to recommend an individual or two that I've worked with in the past. However, if you don't have the benefit of getting some personal referrals from someone you trust, and you're looking to find your own mortgage professional, here are some general tips to keep in mind:

  1. Don't just pick someone out of the phone book. Financing a home is a serious experience. You'll be sharing some of your most personal information with this professional-such as your employment history, credit status and financial situation. Remember that purchasing a home is a serious venture, and you need a serious professional that you can trust.
  2. Do rely on your local bank or credit union. Sometimes the best options are right front of you, and if your local financial institution that you've come to trust seems to have low interest rates then it's not a bad idea to sit down with a representative and discuss their loan programs. Yet keep in mind that the interest rate and terms of the loan program you end up with will likely determine your financial situation for years to come; if you see a lower offer somewhere else, then don't feel bad about shopping around a bit to find a better deal.
  3. Don't fall for the discount broker sales pitch. It's okay to shop around for decent loan programs and interest rates, but there are some mortgage companies out there that claim to have below prime interest rate programs, with zero down and zero closing costs-yet don't deliver in the long run. In my experience, there is no such thing as zero down and zero closing costs; trust me when I say that you'll be paying for the fees somewhere else over the term of your loan. Typically, when a lender claims to offer zero down, zero closing and less than prime rates, this just means that the typical fees are hidden in the fine print. Always read the fine print. And if it sounds too good to be true, it probably is.
  4. Do use your instincts. While this may seem obvious, when it comes to choosing a mortgage professional it often comes down to who you know, like and trust. It's like choosing a family care physician or personal attorney; in a real estate transaction, your lender and real estate agent are representing your best interests, while also keeping private, confidential information close at hand. When meeting with potential mortgage professionals, take the time to get a general sense of what you think of them as people-and then decide whether it's someone you'd want to handle a sensitive transaction.
  5. Do ask your friends, family and co-workers for referrals. If you still can't find a mortgage professional, and the realtor you're working with doesn't have a suggestion, then ask around. Oftentimes the best suggestions come from those you already know and trust.

Ultimately, a real estate transaction will come down to the professionals you choose: your realtor and your lender. Both professionals work hand-in-hand toward getting you set up toward homeownership; one finds you the home, while the other gets you the money. It's a give-and-take relationship that is often built on mutual trust and respect over several transactions. Typically, if you meet with a lender, he or she will be able to suggest some good realtors, and vice versa. It's a tight-knit community and you should feel comfortable that both sides-the real estate agent and the mortgage broker-are working closely together to help you find the right home.