Best Mortgage Lender

UMPC News

As with other financial purchases, you can save a lot of money by shopping around. Is doesn't matter whether you do so on your own or hire someone to help you. Just do it!

On a 30-year, $120,000 mortgage, for example, getting a mortgage that costs 0.5 percent less per year saves you about $13,000 in interest over the life of the loan. That's enough to buy a car.

Doing it yourself

There are many mortgage lenders in most areas. Although having a large number to choose from is good for competition, it also makes shopping around a chore. The major lenders are banks, credit unions, and mortgage bankers. Unlike banks, which are in many different businesses, mortgage bankers only do mortgages. The better ones offer some of the most competitive rates.

Hiring a mortgage broker

Insurance agents sell insurance, real estate agents sell real estate, and mortgage brokers sell mortgages. They buy mortgages at wholesale from lenders (usually banks and credit unions) and then mark them up to retail to you. The difference, or spread, is their income.

Mortgage brokers can sell you a loan from a number of different lenders. The rate the broker charges you is generally the same rate you would pay a lender directly.

The best mortgage brokers:

  • Shop among lots of lenders to get you the best deal available. There are many lenders with many different loan programs out there.
  • Educate you about various loan options and the pros and cons of available features. They take the time to understand your overall financial situation and steer you toward loans that better meed your needs.
  • Hold your hand through the process by filling out all those yucky documents required by lenders and by hounding you to get your documents in so that your loan package is complete.
  • Polish your loan package so that the information is presented in its most favorable, yet still truthful, light.

The worst mortgage brokers are:

  • Lazy and don't continually shop the market looking for the best mortgage lenders. They place their business with the same lenders, who don't necessarily offer the best rates.
  • Salespeople who push certain loan programs that are not in your best interests to earn a large commission. They aren't interested in taking the time to understand your needs and discuss your options.
  • Morons who don't understand the advantages and disadvantages of different types of loans themselves.

Most mortgage brokers fall between the two extremes of resourceful helper and greedy moron. In particular situations, using a broker makes sense. If you're too busy or disinterested to shop around for a good deal on a mortgage, a competent mortgage broker can probably save you money.

Applying for back-up loans

It can take several weeks for a lender to complete your property appraisal and evaluation of your loan package. When you're under contract to buy a property, having your loan denied after waiting several weeks could mean that you lose the property as well as the money you spent applying for the loan and having the property inspected. Some property sellers may be willing to give you an extension, but others won't. It's also extremely disappointing to spend all that time and emotional energy getting so close to owning a special property.

When job hunting or applying to college, people rarely set their sights on just one position or college. It's foolish to put all your eggs in one basket. So why put your life savings and emotional energy on a house purchase at stake by applying for a single loan? I once submitted two separate loan applications for the same property because I really didn't want to lose the deal. And I'm glad that I did, because a mortgage broker that I used didn't deliver what he promised.

Applying for a second loan may mean additional application fees. Completing two lenders' applications also involves more time and work. It's not a huge hassle, however, because lenders require many of the same types of documentation and forms.

Whether for a purchase or refinance, you want the best deal you can get. If a lender knows that you have no other options, he or she may be less willing to work hard to get you the best deal. You should consider getting a back-up loan for this reason as well.