How to find a good lender

nicpon · Joined: 05 May 2006 Posts: 6

Hello,
I'm a first time home buyer and I'm looking for a lender now.
I need some advice and explanation on how to find a good lander.
Here is the situation:
I have been looking thru bankrate.com for a while but I still cannot get clear picture of what is more important when comes down to all the factors.
For example, Loan of 200k
I have lender A with APR 6.764, 0 points,rate 5.250, fees in apr $5600 and estimate payment of $1,104
Then lender B with APR 7.119, 0 points as well, rate 6.250, fess in apr $789 and payment of $1,231.
This is for 5/1 ARM loan 30 year term and I know that I will stay in that house for 5-6 years.
Which loan is bette from my examples?

Also, I know that i should look at APR first when selecting a lender but how should I prioritize the rest of the factors?
Mike

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Based on the exact scenarios you've presented it comes down to one simple question.

Do you want to pay more money up front, or do you want to have a higher monthly payment?

That's it. There's a lot more to consider than simply an APR when choosing who you're going to work with. Things like, the company reputation. The person you're working with. The amount of fees you're paying up front, and what those fees are. The interest rate. Is there a pre-payment penalty. Is one interest only and the other amortized.

I could keep going, but I think you get the picture ;)

nicpon · Joined: 05 May 2006 Posts: 6

What would be the top 5 things that you would look at when looking for lender?
Use 1 being the highest and 5 the lowest.

Is the mortgage payment based on the rate or APR?

pussycat · Joined: 24 Jan 2005 Posts: 94 Location: Kansas City

Payment is based on the rate. The APR is a calculation of the rate plus certain fees. Not all fees charged are included in the APR but they are very few: recording fees and mortgage tax (if applicable in your state) are not included.

Some of the fees that are included are: processing fees, underwriting fees, settlement fee, courier fees and title insurance. There are more, but off the top of my head, I can't remember what they are. I don't deal with that end of the loan, I just underwrite.

Keep in mind, even though a lender does not charge any points, they can still have excessive fees.

My best advice to you is to shop around. Compare rates and fees. Find someone that you feel comfortable with, someone who is knowledgable and understands your particular situation

nicpon · Joined: 05 May 2006 Posts: 6

When you say this Quote: Find someone that you feel comfortable with, someone who is knowledgable and understands your particular situation you mean mortgage specialist at the bank or somewhere else ??

I will definetely talk to some people, before I make my decision but I should look then for low rate and relatively small ration between rate and apr.

I'm doing the research now because even if I go to the bank now I won't be able to tell if that person wants to help me or doesn't give damn and wants to sell me something.

Any recommendations for Columbus, Ohio??

pussycat · Joined: 24 Jan 2005 Posts: 94 Location: Kansas City

If you have good credit, your bank is a good place to start. Call some local mortgage offices and interview loan officers. They are going to be asking you a bunch of questions, so don't be afraid to ask them questions as well. How long has their office been in business, how long has that particular loan officer been in business, do they have any referrals. Don't just go off of print ads and commercials They are going to help you make the biggest investment of your life. Give them as much info as you feel comfortable with. But, be honest. If you are not ready to make an application, don't let them pressure you, however, the caveat to that is they will not be able to give you a very accurate quote on rate and possibly fees.

I am sorry, but I don't have anyone in Ohio that I can refer you to. Haplo is with Wells Fargo which is a nationwide lender and has a very good reputation. Perhaps he can help you.

nicpon · Joined: 05 May 2006 Posts: 6

How can I find out which lender has good reputation?
Could you give me few more examples or some resources where can I find them?

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Do a search on google, find their company and often times if there are any blogs etc. that say 'we hate so and so company.'

BBB.com works as well.

Or just ask around locally. "Who did you use, and how was your experience?" are great questions to ask.

Sometimes that backfires. Wells for example is the largest residential mortgage lender in the nation, so chances are there are a larger number of complaints than if you were searching a small, 1-city only mortgage broker. Then you have to find out more specifically who you're dealing with. Our branch for example is well ahead of the rest of the company on our surveys. (100% on rate your experience with Wells Fargo and would you refer Wells Fargo to others.) I believe the company average is at around 85-86% on the first and 93% on the 2nd. (I just like to throw out random stats as I hear them :))

m2c · Joined: 03 Aug 2005 Posts: 937

I’ll “pm” you on Monday. Can’t remember if there are some brokers we buy from down there or not.

With a 5 to 6 year project occupancy, APRs on the 5/1 can be a bit misleading and are HEAVILY driven by the full adjusted rate. You’re going to (hopefully) have only one year at the full-adjusted rate so has less of a bearing in your case. Ask “A” and “B” to give you an APR based on 5 and then 6 years to payoff. This is NOT an APR but it will take each about 10 seconds to give you the figures and may aid in your choice.

With 5 or 6 years before payoff, I tend towards the lower fees. Contestant “A” with no points and $5,600 in APR fees! Huh? Something’s wild. $789 is more in line with zero-point pricing in Ohio. Ask for a GFE from both.

Make sure “A” and “B” are quoting the same product, specifically they’re both 5/2/2 or 2/2/6s. You could be a real unhappy puppy in the sixth year if you don’t find out ahead of time. Also before you sign a sales agreement, as about any boiler plate specifying the closing agent. A couple of major real estate players have “captive” title companies whose fees are out of sight and continually growing. Don’t believe the real estate agent when (s)he says, “oh the prices are all the same” and run, don’t walk if “fees are regulated by the state”. Regarding the latter, some fees are regulated by the Department of Insurance but this is not where they stick it to you.

nicpon · Joined: 05 May 2006 Posts: 6

m2c-I haven't gotten any pm from you.
I come here again because I found the house I want and I still dont have lender. I'm planning on finding one VERY SOON. Can you guys tell me what is the advantage of ARM loans right now? When I look at bankrate.com, rates forARM and fixed are almost the same and I'm wondering why do they have it?

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Nic,

You never PM'd me back about meeting up in Chicago. Give me a call today, I'll be in the office.