It can be hard to determine who to trust when it comes to a mortgage lender - especially when you hear lending stories like the recent Massachusetts lawsuit filed against Bank of America. Affidavits from former employees say the bank paid bonuses to employees for pushing homeowners into foreclosure, rather than helping them get a loan modification to save their home.
And while that's all going to play out in the courts, when it comes to your situation, you want to find the right lender who can offer you more than just a low interest rate.
"We're in a time now where everyone is extremely busy. It's very important that the borrower work with someone who will take the time to get it done right," says Marianne Collins, executive director and COO of the Ohio Mortgage Bankers Association in Westerville. "So many people shop for the very best rate rather than take the time to choose the very best lender."
Why does your lender matter so much? In a nutshell, the mortgage process can be complicated, time-consuming, and expensive. But if you have the right lender for your needs, you'll have a less stressful experience and hopefully save money along the way.
To help you avoid stress and save money, below are some indicators you've found a great lender…
A Good Lender Will Keep Up with the Changing Mortgage Regulations
Refinancing your mortgage or getting a home loan comes with a lot of forms and red tape. A good lender, however, will tell you exactly what kind of information and documents you need to bring to make the process quicker and easier. Some of these documents might include tax information, bank account information, or paycheck stubs.
And this will become increasingly important, since come mid-January 2014, 115 new laws will be set in place for mortgage lending, Collins says. That means everything will get even more complicated, with more paperwork to fill out, and more rules for the lender to understand.
"There are literally thousands of pages that have been written about those new laws," Collins says. "But a good lender will understand all the new rules and still make the process go smoothly without a hitch."
A Good Lender Will Live in Close Proximity to You
To ensure smooth sailing during your mortgage process, you'll want to consider the geographic location of the lender as well.
For example, if the lender is too far away to understand state or regional laws, the stress - and price - can build, says Matt Schwind, broker associate at Ruhl & Ruhl Realtors in Bettendorf, Iowa.
"I am in Iowa, and if I talk to a banker in California for a client, he/she doesn't even know where we are located. That can make things take even more time," he says.
For instance, it can cause last-minute problems if that lender didn't get the right transfer title form filled out, or other forms that might be different from his/her state. Schwind says ideally you should use a lender close by. When calling larger companies, find out if they have representatives near your location, he says.
A Good Lender Will Get You the Best Rate and the Most Savings
A low interest rate can mean big savings during the length of your loan. But if your lender isn't working closely with you and isn’t looking out for your best interest, you might not see all of the savings you should, says Schwind.
"A good loan officer will look out for the buyer and guide them when it is a good time to lock in a loan rate," he says.
In fact, one of his clients who recently bought a house saved 1 percent on the interest rate for his loan before the rates went up. His lender tracked him down by phone and persuaded the client to lock in a low rate now before the rates started to go up.
A Good Lender Will be Available Whenever You Need Them
You want to be able to reach your doctor for an emergency. The same goes for your lender, because time is money.
"Good loan officers and mortgage lenders work seven days a week, 12-14 hour days to keep up with their clients and give the best service possible," Collins says. "Their main objective is to be available to you for any questions."
And being an accessible lender is just part of building a trusting relationship. A lender who is accessible indicates that they're willing to go above and beyond to answer your questions, appease your mind, and make the process as stress free as possible for you.
A Good Lender Will Help You Close Your Loan on Time
You finally found the home of your dreams. But did you know that you could lose that house if your lender doesn't close on time?
Collins has been in the mortgage lending business for 35 years and has seen people lose the property they wanted because the lender didn't get all the paperwork filed in time.
"We are in a real shortage of inventory [of houses] now, and I've seen people with seven offers on a certain house," she says. "If your bid is the one accepted, you need a lender that will focus on your needs to get everything done for you on time."
Because of this, it's in your best interest to consider factors other than just the lowest interest rate.
"When you shop just for the very best rate, that lender is so busy that they absolutely cannot keep up with the volume of customers. Service may suffer as a result," says Collins. "It's a service industry, and people forget that. You need to find someone that will really get the job done on time," she says.