Why It’s Important to Choose Your Own Lender When Buying a Home

If you’re reading advice online about buying a home (and who isn’t!), you’re likely to come across a question that many homebuyers ask: Should I work with the mortgage lender my real estate agent recommends, or find one myself? 

That’s a really important question to answer.

Choosing Your Own Home Lender Vs. Realtor Recommendations

Experienced real estate agents typically have a line-up of professionals they like to work with, including lenders. It’s easy to take a recommendation from an agent you’ve grown close to, particularly since buying a home and getting ready to move are so stressful! With a tight time-frame to get all requirements and contracts completed before settlement date, having people on your side with an established connection can make things run faster and smoother.

There’s nothing wrong with considering a recommendation. But remember, it’s your money. It’s up to you to do your due diligence.

People now spend a higher percentage of their income on a home than 20 years ago. Interest rates can change daily. There are more kinds of loans to choose from, so there is more to figure out before making a decision that will have a huge impact on your finances.

Your loan officer is your main contact throughout the mortgage procedure, and is someone you need to be comfortable with and confident in. He or she is super important in helping you understand and access your options, and getting you through the home loan process with as little frustration or anxiety as possible.

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How to Find a Mortgage Lender

How to shop for a mortgage lender that can deliver the best loan terms and interest rate for your money? Here is a step-by-step guide.

1. Find a mortgage lender to fit your situation

Although most home buyers think they should be shopping for the best interest rate, pricing is very similar between lenders. It’s usually the type of home loan you get and the loan terms you choose that save you the most money.

To qualify for the lowest rates and fees available today, you need excellent credit and a substantial down payment. Without those two things, a lender who can work with your personal situation becomes even more important.

2. Understand the types of lenders

Basically, there are direct lenders and mortgage brokers. Direct lenders work with their institution and brokers can pair you with different lending companies. If you’re not finding the loan you want at your bank or credit union, look for a lender with more loan options or a broker who will shop for a home loan that suits your needs.

3. Look for the person, not the institution

The loan officer you work with can be more important for getting the right loan than the mortgage institution. Look for someone experienced, who understands the local market where you’re buying, and is good at fitting loans to people in similar financial situations as you. Recommendations from family and friends will come in handy for finding knowledgeable mortgage professionals.

Questions to Ask a Lender

Once you find two or three lenders you’d like to work with, two of the most important questions to ask are:

  • What types of home loans do you offer?
  • Which type of home loan is right for me?

Access to regulated loans – and the knowledge and experience to know which mortgage program will work best for each buyer – are the things that indicate a great lender.

Other questions to ask mortgage lenders are:

  • Do you participate in any down payment assistance programs?
  • What are your closing costs?
  • How much time does it take to complete a mortgage?
  • What documents will I need to give you?
  • How do I lock in a low interest rate during my application process, and do you charge for that?
  • How do you communicate with your clients?
  • Who will be the title and escrow agency or attorney, and how much does that cost?

To learn more about common types of home loans and to find examples of the answers you should be looking for, see the National Association of Realtors “10 questions to ask a mortgage lender.”

Resources to Help You Make Your Decision

If you need more help finding a home loan, the U.S. government Federal Trade Commission website has a page devoted to helping consumers learn how to shop for a mortgage. Additionally, these sites are some of the reputable financial advice websites that rank and review mortgage lenders:

The Relationship That Comes First

The trust you place in your real estate agent should not be overlooked. And Realtors and loan originators often work together – building relationships is an important part of doing business. Just remember that when it comes to getting a home loan, your relationship with your money comes first.

No matter whether you work with your agent’s recommendation or find your own lender, working with a loan officer who asks the right questions – like the knowledgeable, experienced ones at Capital Bank – can help you get the loan that’s right for you.


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