How to Choose a Lender
Hello, I wanted to do a video on how to choose a lender. I’m a lender. You might think this is biased but it really isn’t. I really want to give you straight answers and good ideas on how to choose a lender. So I’m in my blog here, I just went into my blog by clicking “blog” up at the top of my website. And then in the search box I clicked “how to choose.” Because I’ve written a couple of blogs about this in the past. And I wanted some reminders.
So the first one that’s really interesting. This is how to choose a buyer agent, a realtor. We’re not going to cover that right now. Choosing your lender based on the three D’s, doughnuts, drinks, and dinners. I’m going to touch on this real quick before we jump in. I wrote this blog a long time ago. But it covers the fact that a lot of lenders are referred by their realtors. Their favorite realtors that they have relationships with. So as a buyer if you’re dealing with a realtor and you get a referral to a lender or maybe two or three lenders, it’s usually some sort of relationship.
How to Choose a Lender: look for the fresh doughnuts!
I can remember years ago when I first started in the industry I was told that to get business I should meet people. I would go hand out donuts at the local realtors’ Monday morning meetings. And I’d make sure I had the freshest doughnuts. Or I’d go to the local watering hole where I knew realtors congregated and pick up the bar tab. Or you take a realtor to dinner and you pick up the tab. After a certain number of years of that, it just didn’t seem like a proper business model.
And it didn’t really seem like a measurable way with a certain set of metrics for buyers to know they’re getting a good lender. Feel free to read this blog. I think it’s pretty funny. But I talk a few things about the realities of relationships and how realtors parse out roofers and home inspectors and lenders. And it’s not necessarily that they’re measuring the best metrics and who’s the fastest and most responsive. And cost and efficiency and experience. A lot of times it’s just, “I really like this person, I’ve worked with them”. And they usually will have worked with a vendor for a while and feel comfortable giving them as a referral. I just don’t know that that’s really the best way to do it.
How to Choose a Lender: use business metrics
So the next one, Six Tips on Choosing A Mortgage Lender or Mortgage Broker. This is a blog you can read. Again just go into my blog and in the search field, type in “how to choose.” And you’ll find his blog. I just want to skip straight to the six reasons. Number one, obviously ask around. That’s what I just said. Maybe asking your realtor, asking a neighbor, or asking somebody at work. It doesn’t hurt. But I think you have to apply some metrics to the decision and the referral that you’re getting that maybe came through doughnuts, drinks, and dinner.
It doesn’t mean you have to disregard that person. But I still would like you to apply some metrics to that person and how experienced are they. And how good do they seem to you? How responsive are they? And certainly, then you start talking about checking into terms and cost. And mortgage insurance if you don’t have 20% down. What is the cost of their mortgage insurance? Their education, how much are they going to educate you?
How to Choose a Lender: check online reviews
Two, read online reviews. Well, that’s pretty self-explanatory. We all read online reviews for almost everything. Products and services, and doctors and lawyers and realtors. And mortgage lenders should be included in that group. Check reviews. And if they have three, that may not be a good data source. If they have 40, that’s probably pretty good. If they’ve got hundreds, that’s probably a really good idea of how that person really performs.
Check out their website.
So this one is an interesting one to me. I feel like everybody should have a website. It’s a great way to convey a lot of data without you, the consumer, having to engage with that person. I hope people learn a lot on my website. And maybe they never contact me, that’s okay. I think you get what you give. And I give a lot of free information on my website. I’ve seen some great websites from competitors. And I’ve seen some websites that are really pretty spare and they’re not really anything but a fancy calling card. I don’t know about you, but that bugs me. If you’ve got a website, why have it if you’re not educating and using it as a tool to provide something for the consumer that you hope to win over? Schedule a meeting or a call. So that’s pretty self-explanatory too.
Engage and interview
After you’ve learned what you can from, “Have you gotten a referral? Have you looked at reviews? What have you learned from this person’s website?” Engage, schedule a call, schedule a Zoom video. Do whatever you have to do to connect with that person. And I think seeing and talking to that person live, you really get a feel for if you want to engage further.
And then five, of course, find out about fees, including interest rates. But appraisal fees and all the fees that come with it. Maybe have them send you a loan estimate. It used to be called a good-faith estimate, now we call it a loan estimate. And take a look at their fees.
Look at the overall picture
And then last, number six, look at the bigger picture. So you crunch the numbers. Maybe all things are equal or maybe close, maybe it’s an eighth of a percent in rate one way or the other. Maybe it’s a few hundred dollars in fees one way or the other. That’s pretty close to me. But does one person stand out? Isn’t it worth maybe a little bit more for the standout? If there really is a standout.
And maybe you’ve got three really excellent lenders and you can afford to just pick by, “Okay, well, they’re all amazing. They’re all experienced, they all have great website, they’ve all educated me, they’re all responsive, wonderful, they’re all wonderful.” Well then you can afford to pick and almost commoditize the decision and pick as if you were picking a commodity and just go straight to the lowest price. I find most people pick by the lowest price regardless of everything else like experience and education and execution and responsiveness. And that’s a big mistake. We’re creating our own horror stories by not considering all of these qualitative measures. As well as looking at the fees and the costs and all that sort of thing.
Anyway, that’s my list. I hope you found that interesting. I hope you enjoyed the video as opposed to reading everything. Please check in with me with any questions. Happy to engage if you wanna talk further. Thanks very much.