We’ve all seen them and heard them – offers that seem too good to be true.
When shopping for a mortgage or looking for the best loan officer for your situation, you are better off steering clear of all the hype. Sometimes, going with your gut can be your best option.
“If you call five different lenders and four of them say they can get you a 4 percent loan, and the fifth tells you he can give you 3.5 percent, it might be too good to be true,” says Dale Robyn Siegel, president and mortgage loan originator at Circle Mortgage Group in New York City. She also authored The New Rules for Mortgages: How to Get the Right Mortgage in Today’s Market.
“Also, if one of them tells you he/she can close in three weeks, do you really think that will happen when everyone else said it will take 45-60 days?” she says.
It’s about common sense, it’s about feeling comfortable with that person, and it’s about making sure they know what they are talking about. Finding the right loan officer make take some time and research.
“You want to know about your lender individually. Ask questions such as how long have they been in the industry,” she says. “If the guy is so excited and tells you that you are his very first client, I’d just quietly walk out the door.”
You should also ask them how long they have been at the company. The lender is only as good as the company they work at, she says.
“If they just switched over from another company recently, beware. They probably don’t have anyone in their office yet that they know that can help them expedite your loan,” Siegel says. “It’s just like the first date. If it doesn’t work, you move on. There are plenty of loan officers out there.”
Her biggest rule is to not find your lending officer online or find someone in a local paper. And really don’t go for someone just because they advertise the lowest interest rate. Listen to your friends and family who have recently gotten a mortgage. Find out who they trust and who they would go to or go back to if they needed a loan.
No matter who you decide to do your loan, you should know that there are certain things they cannot ask potential borrowers, according to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. For instance, lenders cannot deny loans based on color, religion, race, sex, marital status, social economic status (such as being on welfare or Social Security Disability), age or national origin. There are some forms, however, that ask your sex, ethnicity or race for data information only. You don’t have to answer those.
The lender can, however, ask lots of questions about your income, job, bank accounts, any foreclosures or bankruptcies, debt, credit history and expenses.
The mortgage crisis did prompt stricter underwriting guidelines, and banks and mortgage companies want a lot more information than they used to. But that is for your protection and theirs, says Siegel.
“During a loan process, information should flow continuously between you and the lender. There shouldn’t be long periods of dead time,” she says. “That should be a red flag if you aren’t hearing back from them.”
For instance, you should hear back from the company and loan officer within a day or two after the application is taken. A commitment letter should be given to you within a week, and an appraisal should be ordered soon after that.
“There are situations that come up in every loan, every inspection and every appraisal. But you should want to know everything that is going on, and the loan officer should be giving it to you,” she says.
When you are looking for a loan officer and leave messages to several of them, remember which ones call you back the fastest.
“Communication is very important. If someone tells you that they turn off their phone on the weekends, that’s not good,” she says.
She also warns borrowers to not lock in too early to an interest rate when dealing with a loan officer.
“If you lock in too early and can’t close on time, your interest rate will expire,” she says. “You need to know that if that if this scenario happens, that you need to know if you have to pay more. Some companies make you lock into an interest rate when you send in your application. It’s rare but these are the things to send up a red flag about who you are dealing with.”