Posted by Chireen on August 22, 2003 at 01:47:32:
Here goes and hope I don’t get blasted.
First, you should go to more than one Lender in your initial search. I’d suggest trying 3 Lenders, make sure at least one of them is a Mortgage Banker (more info below on this). No, if ONLY Lenders pull your credit it is not supposed to affect your credit score. Credit bureaus changed that about a year or so ago, because it shouldn’t hurt you to shop for a home loan. However, if anyone else pulls your credit other than Lenders, it will hurt your score. So don’t shop for home insurance until you started the loan process with the Lender you choose.
Here’s the MOST IMPORTANT thing to do when shopping for a Lender…ask them if they are a Mortgage Banker or a Mortgage Broker. Or, ask them if your loan will be funded “in-house” or not. Here’s the difference. A Mortgage Banker uses their own funds and their own underwriters. They don’t have to “look” for a loan for you. You are either preapproved with them or not. A Mortgage Broker has to “look” for a loan for you. They can give you a preapproval, but it doesn’t mean a Lender (where the money is actually coming from) has preapproved you.
I personally would go with a Mortgage Banker. But there are bad loan officers and good loan officers out there working for both, so that’s why I say you should check out both Mtg. Bankers & Brokers. But if you go with a Mortgage Broker, ask to see a preapproval from the actual Lender that will be funding your loan. This is a computer generated preapproval, and they should have no problem giving you a copy of it if you are actually preapproved. Actually, it wouldn’t be a preapproval, it should be an approval based on certain items being submitted.
You shouldn’t give all your info to all of them, but expect to fill out the 1003 (3 page loan application) for all of them so they can run you through their computer system in order to get an approval contingent upon you submitting paystubs, W2s, bank statements, etc. When you’ve picked your Lender, then you give those items to THAT Lender. The loan application will probably be done on the phone with most of them, you won’t actually have to fill it out.
Also, since you already have a property in contract, you may want to “lock” your interest rate. You need to get IN WRITING something that states at xx interest rate you will be charged EXACTLY how many points (if any) the origination fee, and any other Lender fees. Obviously if you haven’t locked your interest rate, this can change on a daily basis – it is MOST important to get this when you lock. When you lock an interest rate, get this in writing again on the day you lock for that interest rate. The “Good Faith Estimate” is supposed to be your “in writing” estimate of fees, but they can be changed without your permission. You need to get something additional, other than the GFE (especially when you are locking your loan). When you lock, all these fees should be exact and definite, and the Loan Officer should have no problem filling out some sort of Interest Rate and Fee Guarantee that spells all this out in exact detail. And until you lock your rate, you aren’t going to get a guarantee (and may not get one after you lock if you don’t ask for it). I can’t tell you how many times I’ve seen a Good Faith Estimate showing a discount point of “0%-3%” typed into the GFE. Which means the Loan Officer can charge anywhere in that range, which makes a HUGE difference. And don’t go on verbal…get it in writing! Take control, it’s YOUR money and YOU who has to pay a LOT of money for this purchase.
On the other side of that, when you find a great Mortgage Company and Loan Officer, and trust and feel comfortable with them, then DON’T continue looking to see where you can get an eighth of a point lower interest rate. If you look hard enough you can always find someone willing to give you a little lower interest rate (or it would seem so on the surface). I’ve seen lots of good Loan Officers be honest and work hard for a Borrower just to have them go elsewhere two weeks before closing for a little lower rate. If you aren’t willing to be honest & committed (once you’ve made your Lender selection) then you will ultimately get a Lender who isn’t honest & committed also. So you should be honest and committed to the Mtg. Company that you have chosen as long as they provide you with great service and are willing to make sure everything is in writing. No surprises at closing is good for you AND them.
Hope this helps!
Thanks,
Chireen
“My 2 cents worth…and priced just right!”