HOW TO COMPARE MORTGAGE LENDERS

When purchasing your new home, one of the most challenging tasks is deciding which lender to fund your loan. Even after deciding what type of loan you want  (Conventional, FHA, USDA, VA, JUMBO, or adjustable rate), you still need to figure out which lender best suits your needs. 

PERSONAL CARE

We find that most buyers undervalue the importance of being able to contact their lender after hours, on holidays, and on weekends. Typically, questions arise outside of the typical workday when shopping for homes, making offers, and negotiating contracts. With the fast pace of today's housing market, you cannot wait for a next-business-day reply. That is why it's essential you only work with lenders who will give out their personal mobile number and will answer it outside of the traditional workday. 

SPECIAL PROGRAMS

Many banks and mortgage brokers specialize in special programs for buyers. These programs allow a buyer to purchase a home with zero down payment or an unwarrantable condo.

TIME

Sellers typically want to be moved out in 30 to 45 days when they place their home on the market. After price, the most important factors for sellers are contingency deadlines and closing dates. While your Georgia Move agent works with your lender to create “achievable”  deadlines for your contingencies, these deadlines only work if your lender can keep to them. Unfortunately, you have no leverage to extend your deadlines after your diligence period ends. If your lender cannot stick to the agreed-upon deadlines, you could be out of a house and thousands of dollars. 

INTEREST RATE

Most buyers only focus on interest rates when comparing loans. While this is an important factor, it is not the only cost when purchasing a home. When it comes to total loan cost, a lender can easily manipulate an interest rate to appear to be a good deal when it’s only costing you more money. Lenders can lower or raise your interest rate by buying down or increasing your closing costs. When deciding on the right lender for your financing, we suggest itemizing out all the loan costs over a set period to understand which loan offers the best deal.

LENDER FEES (CLOSING COSTS)

Some buyers are surprised that most mortgage brokerages and banks do not service their loans. After you have closed on your property, many, if not most, companies will package your loan and sell it on the secondary mortgage market to companies like Freddie Mac, Fannie Mae, Mr. Cooper, etc. While selling your loan does generate the loan company one form of revenue, many lenders receive the bulk of your home loan profits from the closing fees they charge you to originate your loan. This is commonly known as an origination fee. Even if your loan estimate doesn’t have an “origination fee,” you might still be paying a fee that acts similarly. When comparing home loans, it is important to calculate all the fees charged to close on your new home. 

NON-LENDER FEES

One tactic some lenders use to make their fees seem lower than the competition is to artificially lower fees that the lender does not control. These fees include escrow prepaids (property tax, homeowners insurance), title searches, title insurance (lender and owner), HOA dues, HOA initiation, attorney, wiring, and appraisal fees. When comparing loans, we suggest you ensure all these fees and costs are the same among all lenders. To get an estimate of attorney fees, check out our closing page.

DOWN PAYMENT 

Depending on your down payment amount, a lender can quote you a lower interest rate, a loan with or without PMI insurance, or a special in-house product. One way to ensure you receive comparable quotes from lenders is to use the same down payment for each quote.

SPREADSHEET

In our experience, comparing loans over an extended timeline is best. While we all hope to stay in our dream home for as long as possible, life events and sometimes early moves will happen. When calculating how long you plan on being in a property, we ask that you divide your guest in half. You can then take your monthly payment (principal, interest, PMI, property tax, and insurance), multiply it by half the time you think you will live in the property, and add that to your total closing costs. With your new total, you can now compare the short-term and long-term costs of the loan. You can find our loan comparison spreadsheet to help you understand and compare different lenders. Spreadsheet Link

ASK FOR HELP

Your Georgia Move agent is here to help you through the entire buying process. If you need help comparing lenders, don’t be afraid to ask.