One obvious source is to ask friends or coworkers who have recently bought or refinanced a home how they liked their lender. Other good sources are realtors and title people; they work with lenders daily and know who the best ones are because their sales depend on them. One of the best tools to narrow down lenders and compare fees is called a Good Faith Estimate. This is an abbreviated form similar to the federal Department of Housing and Urban Development (HUD) standardized form (HUD-1) that the real estate industry uses at closing. In mortgage-speak these forms are called the HUDS.
The Good Faith Estimate is like half a balance sheet. On each line is printed the item, and you follow the line across to a column on the right margin that gives the cost. Along with this form and some careful shopping you can narrow down the pack fairly quickly. One home-buying couple, Peter and Angie, used a Good Faith Estimate to avoid unnecessary costs when Angie’s family pressured the couple to go with Angie’s brother, who was new in the mortgage business. Reluctantly, they agreed and filled out an application to get the process started.
They were working with an agent and she suggested that they also get an estimate from a lender she had good success with on other transactions.
To make a long story short, Pete and Angie got a estimate from their agent’s recommended lender and, after a little prodding, from Angie’s brother also.
Interestingly, comparing the two estimates showed that Angie’s brother’s estimate was $1,200 more than that of the other lender, not because he was trying to take advantage of family, but because his company specialized in B loans, and that’s the loan it tried to put Pete and Angie into. The other lender, however, looked at their credit and income and felt they could qualify for an A loan. It would be a squeeze, but it was doable and would save the home buyers serious bucks.
The bottom line here is to always get more than one estimate. If your brother-in-law is a mortgage lender, good. Put him on the list, and maybe he’ll shave some costs for you. But don’t assume that anyone is the best choice until you’ve shopped and compared the fees. It’s best to narrow your list down to no more than three loan officers and give them a call. They’ll confirm what you can qualify for and their figures should be in the same ballpark. Of course, the other purpose of your calls is to decide which loan officer you feel most comfortable working with so you can go on to the next step.
The Good Faith Estimate is like half a balance sheet. On each line is printed the item, and you follow the line across to a column on the right margin that gives the cost. Along with this form and some careful shopping you can narrow down the pack fairly quickly. One home-buying couple, Peter and Angie, used a Good Faith Estimate to avoid unnecessary costs when Angie’s family pressured the couple to go with Angie’s brother, who was new in the mortgage business. Reluctantly, they agreed and filled out an application to get the process started.
They were working with an agent and she suggested that they also get an estimate from a lender she had good success with on other transactions.
To make a long story short, Pete and Angie got a estimate from their agent’s recommended lender and, after a little prodding, from Angie’s brother also.
Interestingly, comparing the two estimates showed that Angie’s brother’s estimate was $1,200 more than that of the other lender, not because he was trying to take advantage of family, but because his company specialized in B loans, and that’s the loan it tried to put Pete and Angie into. The other lender, however, looked at their credit and income and felt they could qualify for an A loan. It would be a squeeze, but it was doable and would save the home buyers serious bucks.
The bottom line here is to always get more than one estimate. If your brother-in-law is a mortgage lender, good. Put him on the list, and maybe he’ll shave some costs for you. But don’t assume that anyone is the best choice until you’ve shopped and compared the fees. It’s best to narrow your list down to no more than three loan officers and give them a call. They’ll confirm what you can qualify for and their figures should be in the same ballpark. Of course, the other purpose of your calls is to decide which loan officer you feel most comfortable working with so you can go on to the next step.
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