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First Timers: How to Pick A Lender

Posted by Sharon Rosshirt on Wednesday, January 4th, 2017 at 5:23pm.

Most of the people I talk to who are in the very early stages of planning to buy a home ask the same questions. They want to know what their buying power is, what kind of loan rate they can expect, what the monthly payment would be like (especially if you are currently renting.) The best way to get these questions answered is to start talking to a lender. However, there are a lot of lenders out there and they aren’t all the same! Here is a little insight on how to pick a lender.

What to Look for in a Mortgage Lender

  • First, off they’ll all have a license. That is a good starting point. Generally, their website or their business card will list an NMLS#. That will let you look them up if you need to.
  • A lot of what makes a lender good to work with is subjective. Try to get someone you trust to recommend someone they have worked with. Realtors are a very good resource for referrals because they have a strong basis for comparison. Your Realtor has done multiple transactions, with many different lenders and can provide you with a few options.
  • Get a local lender. They’ll be able to understand the local market and help you get a loan that is more competitive in your area. You can work with out of state lenders, but they might write a loan that isn’t as compelling to local buyers  (plus it will help you keep Austin weird!)
  • Try to make sure that within their bank they don’t have to send your loan application out of state for underwriting and approval. Many banks have in-house underwriting which can help speed up the loan process and avoid problems that can complicate your closing.
  • Look for someone who will provide an itemized estimate of closing costs, fees, and interest rates. Someone who gives you a written estimate with an itemized breakdown is giving you the ability to closely comparison shop with other lenders. If they give you a very detailed breakdown of how the loan they plan for you works it means they are confident that it is a good deal that will stand up to scrutiny.

Make sure to ask these Questions of a Potential Lender

  • Contract to close, how long will it take to finish my loan? – This helps you avoid delays that can disrupt your closing. Generally, the last hurdle of a transaction is funding the deal. It is a major letdown if the loan keeps it from working out.
  • What is the structure of the banking entity you work for? Is it a large national bank, a local credit union or a regional entity? Ask what they see as the advantages/disadvantages of their institution. (often the smaller the institution, the more flexible they can be, but large banks sometimes have better support for specialty transactions)
  • Decide whether you want a loan officer that mainly meets in person or if you want them to meet mostly online or over the phone. Everyone has a different working style so compatibility is important here!

Keep an Eye Out For

A good tone of conversation – A good loan officer isn’t going to push you in a particular direction, they’ll usually lay out multiple options, and explain those options for you to choose from. The meeting should be an open-ended conversation where all of your questions are listened to and answered. It should be an educational process and not a high-pressure situation.

They should also help you to set expectations for the entire loan process. Essentially, they should lay out an explanation of future events that helps you know what to expect and avoid potential problems before they happen.

What to bring to a First Meeting

To really get into the useful number crunching, your lender is going to need real numbers to work with. Bring these items with you for the most useful and exact conversation with your lender.

  • Your Driver’s License or State ID
  • A copy of your Social Security card
  • Your homeowner's insurance info (if applicable)
  • Your most current two pay stubs from your work
  • Federal tax returns for the last two years
  • W-2s for the last two years
  • Contact info for your Realtor, CPA, Landlord and your employer
  • Two Months of account statements for your Savings, Credit, and Checking accounts

1 Response to "First Timers: How to Pick A Lender"

Millenials Turning to Real Estate For Investing wrote: [...]Real Estate ownership has been an important milestone in the "American Dream" from the outset.  In Central Texas, many young people have avoided taking the leap because of the higher prices that our market has compared to the rest of the country.  However, many savvy young people have figured out how to make the dream of home ownership work for them while investing in their future at the same time.
Why are fewer young people buying?
Culturally, Millenials are getting married older, have a less stable job market, and are less prepared than the Baby Boomer generation before them.  When talking to many millennials about home ownership many will just reply "Why not just rent?" There is another group however that realizes that many of the rents in Central Texas would allow them to purchase a home and not only lower their monthly living expenses but also begin to invest in Real Estate.
How to Find a Good Investment Property
One of the best ways for renters to break out and become homeowners is to look into purchasing a duplex and living in one side of it.  Not only will the other tenant be paying between 50%-70% of your monthly mortgage you also have tax benefits as a landlord.  Additionally, after living in your duplex for 2-4 years you will have saved up nearly enough to purchase a single family home and move out of your half of the duplex and rent it out to a new tenant.  
Where to Start
A REALTOR is a great resource if you are interested in learning more about investing.  You can also check out some of these other guides on

Thinking Ahead for First Time Homebuyers
Avoid Buying a Money Pit in Your First Home
First Timers: How to Pick A Lender[...]

Posted on Tuesday, May 9th, 2017 at 12:39pm.

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