When choosing a lender, consider the following:
- A good loan officer answers your questions and responds to your calls/emails in a timely manner. (COMMUNICATION)
- A good loan officer was referred to you and is local or has a local branch to increase accountability and the likelihood of a successful transaction. (CASH AT CLOSING)
- A good loan officer can meet with you in person to discuss the details of the loan process and the products available to you. (COMPETENCE)
- A good lender is not a company who gave you the best quote on the internet! (COSTS)
- When deciding between two lenders who meet the above criteria, compare the rates & fees to each other by determining the savings per month on the lower rate vs. the number of months it would take to break even by paying higher fees up front.
- For example, if one lender offers you a rate that is lower by 0.25%/month but their fees are $1000 more: the monthly savings at 5.25% vs. 5.5% is $23/month on a loan of $150,000. Divide $1000 in fees by $23/month saved to learn that it would take you 43 months to break even. So if you plan on living in the house (or having that loan) for 4 years or longer and have the $1000 up front, it may make sense to lock in that lower rate so that after month 43, you will start to save money.