Choosing a Lender

House hunting can soon prove to be a very tedious and costly process. If you want to buy a house or own a property, you should first search for a lender. Some people mistakenly believe that brokers lend money, but this is false, brokers find the lender who will then present a rate to you that you can either accept or reject. Lenders are financial institutions who will provide you directly with a loan. It can be very helpful and efficient to use a lender, but regardless of whether you decide to use a lender or a broker, make sure to search extensively for the best loan terms and the lowest interest rates and fees.

Before we talk about what questions should be asked during the process of choosing a lender, I want to explain what lenders look for before they approve you. Lenders will request specific documents from you, and those documents should be in their possession at the time you are applying for a mortgage or a loan. Check out the list below:

• Two year tax returns with all attachments (W2’s forms, 1099’s, schedules, K-1’s, etc.)
• One month pay stubs for all income source of funds
• Two months of bank statements
• Identification (Driver’s License or State ID) and Proof of legal U.S. Residency
• Proof of Military Service if applicable
• Alimony or child support documents if borrower wishes to qualify with this income source
• Proof of Reserves (Lenders want to be assured that payments can afford to be made after closing)
• Cancelled Rent Checks (For verification of paid rent for past renters who have not owned property before)
• Lenders tend to push extremely hard when they want you to go in a certain direction, and if you do not like their pushiness, you may need to walk away and find a new lender who better suits you. You want to find a lender who is going to satisfy your needs and reply to your questions with straightforward answers and not with complicated or confusing jargon. Check out the list of possible questions formed by Real Estate website, Zillow below.
• Are you licensed by the state?
• Whom do you represent (e.g., a bank, broker, finance company)?
• What are your loan programs? Do you offer VA loans (for example)?
• What is the par rate (the actual rate for a particular loan) for a 30-year fixed loan?
• Can you estimate and explain your fees and costs for the loan?
• Are you going to hold this loan or sell it?
• Will there always be someone available to answer my questions in a timely manner?
• Where and how are you keeping my personal information secure?
• What is the interest rate you are offering, and how did you arrive at those rates?
• Is this the best rate that you can offer me?
• How will the rate change over the life of the loan?
• With an adjustable-rate mortgage (ARM), what is the worst-case scenario I could face when the rate resets?
• Are you locking in my rate? For how long? What does the lock cost me?
• Can you explain an annual percentage rates (APR), and what is it for this loan?
• What am I paying in points?
• What are my monthly payments?
• Do I need to pay private mortgage insurance (PMI?)
• Are there any prepayment penalties on this loan?
• For a reverse mortgage, who will I be working with after closing?
• Here’s my time-line. Are you certain you can get this done in time for closing?

There are many more questions and different versions to these questions that can and should be asked. No question is too simple or too complicated for a qualified lender to answer.

Thank you for reading! Should you have any questions, comments, or concerns please feel free to reply or call/text me on my cell: 305-333-0335.

*This information should not be used as legal advice but only has a guide and a learning tool. *