Finding the Best Mortgage Lenders: The Good, the Bad, and the Ugly

There are some limitations associated with relying on just a mortgage interest rate quote to select your lender. Obviously the interest rate is important--and you would naturally weed out anyone who isn't competitive right out of the gate. However, the mortgage quote is just the beginning. The lowest mortgage rate advertised isn't your best deal if:

• You don't qualify for it.
• You can't lock it in.
• It isn't for the best loan product for your situation.

The Lender Behind the Interest Rate Quote

The person and company behind that rate quote is of critical importance. A bad loan officer can stick you with the wrong type of loan, price your loan incorrectly (bait and switch), or even cause you to be declined for your mortgage. Make sure that you are dealing with a professional employee and a reputable company before you make any commitments. When looking for a lender, check to make sure that it's licensed in your state and is in good standing.

Choosing the Loan Officer

When evaluating loan officers, look for these characteristics, which all good loan officers have in common. Good loan officers:

• Return your calls. Preferably in less than an hour. Especially when fluctuating interest rates are on the line, you don't want a loan officer you can't reach.
• Explain to your satisfaction. They should be able to justify any recommendation they make and explain any terms they use--in plain English.
• Offer alternatives. In most cases, more than one kind of loan will work for you. Your loan agent should explain the pros and cons and help you make a choice you feel good about.
• Ask you questions. The right loan depends on many things. How long do you plan to keep the property? Do you expect increases or decreases in income with a pending new job or retirement? Does your income fluctuate? If your loan officer isn't asking you questions, find one who does.
• Consider your comfort. Do you want your final loan documents early so you can review them at home? Would you like your loan officer to accompany you to the closing? Do you prefer detailed explanations? Or are you a "bottom line" person? Your loan agent's work style should reflect your preferences, not his or hers.
• Think on their feet. Your credit report has a booger. Your self-employment income is less than you calculated. The property appraisal comes in at a lower value. An underwriter has a question about your child support. Very few mortgages go through hitch-free. A good loan officer prepares for these possibilities and solves the problems efficiently.

So when shopping for the best mortgage, consider more than rates. Do get some mortgage quotes, narrow them down to two or three, then call the loan agents. Choose one who can explain programs and mortgage terms like APR and who can tell you how your mortgage rate is determined. Select a loan officer who asks you questions about your lifestyle and finances and credit--you can't get a meaningful quote if the lender doesn't have this information. See who returns calls promptly and makes your part as easy as possible. Start your application with the agent who has experience, a strong work ethic, and integrity.