Some of life’s decisions are more momentous than others. Where you go to school, who you marry, what career you will pursue or where you buy your first home, these decisions are biggies, and they will shape what happens in your life going forward. Who you work with to get a mortgage? Not so much. Using a bad mortgage lender won’t change your life. But it will make for a miserable experience while you are going through it. A lot of people look at a mortgage as a commodity, especially now when the entire market is made up of fixed rate conventional or FHA loans. The truth is, who you choose, both from a company and individual standpoint, will make a big difference in the price you pay and how satisfied you are with your experience. If you are in the market to buy a home, it pays to do more than shop for the best rate and fees. You also need to know who can best help you with your situation.

I’m not saying that rates and fees aren’t important. They are, and you should ask for a written Good Faith estimate from any lender you consider using. But rates and fees are only one piece of the puzzle. You need to ask some questions and do some research about both the company who will make the loan, and the loan officer who will work with you to make sure you are getting the right fit for you and your situation.

Here are some things to consider when choosing what mortgage lender, and what loan officer you want to deal with:

The mortgage lender:

What kind of company is it? – There are several different types of lenders – banks or direct lenders, mortgage brokers and mortgage bankers. Each one makes mortgage loans, but they each do it in different ways. Mortgage brokers usually have a number of options on where they will place the loan which may help with the pricing, but they have the least control over the loan process. Banks and direct lenders usually have only one source for the loan, themselves. This means that if they are looking for more business they may be aggressive with their pricing, but once their pipelines fill up the pricing may quickly get uncompetitive. Banks and direct lenders usually control the process, but they often do everything from remote processing locations so the loan officer has little contact with the loan once it leaves his hands. Mortgage bankers are hybrids between the two, and they often have multiple sources of lending, like brokers, but retain most of the control, like bankers.

Who will order the appraisal and what happens if you need to switch lenders? This is a question that has only recently become an issue, since the adoption of the HVCC appraisal guidelines. With these new guidelines the loan officer has no direct contact with the appraiser as a way to make sure that the loan officer doesn’t pressure the appraiser into giving higher values for the properties. The problem comes with the details of the guidelines. In many cases it is the end lender who the loan will be locked in with who orders the appraisal. This not only means less control, but if you are denied with that lender or decide to switch lenders for some reason (like when rates drop), you will need to start all over again with a new appraisal from the new lender. This isn’t the case with all lenders, but it is something you should check on and a question to be asked at the beginning of the process.

How long will it take to approve the loan? The mortgage business has slowed down over the last few months as the refinance boom died down. But right now there are some companies that can close loans quickly, and others that still need a minimum of 60 days and sometimes 90 days before they will be able to close. A lot of this comes down to control. Do they do their processing and underwriting in house? Or do they ship the loan off for these loan functions? What are their underwriting turn times? Who puts together the closing documents? Will they be able to meet the contract contingency date and the close date? These are all questions you should ask up front, so you aren’t surprised down the road.

Is the lender set up to do the loan that is best for you? Not every lender has the same inventory of loan options. For example, FHA the best loan available for most first time home buyers, was not a real factor in the market until the last 2 years. It now accounts for almost half of the loans taken on. Does the lender offer FHA or will they try and steer you into another option, or say you need a much larger down payment to buy? If they can do FHA, will they broker out the loan or are they a direct endorsement FHA lender? The same goes with other programs. Check to make sure that the lender has the program you need and is able to work it for your benefit.

What is the company’s reputation? Ask your Realtor or a real estate attorney what they know of the company. Do a Google search and see what comes up.

The loan officer

Choosing the right company is critical, but it is the loan officer who will be your day to day contact. A good loan officer can make a world of difference, while a bad will make your experience a case study in frustration. The loan officer’s job is to bring in good loans for the company. The loan officer is like a concierge and a guide. Their job is to qualify you for the mortgage, find the program that works best for you, make sure that your situation fits within the guidelines of the program, get the initial approval, and gather all the documentation needed. The loan officer works with a team on the inside, but he may be your only contact throughout the loan process.

Here are some things to ask any loan officer you are considering:

How long have you been in the mortgage business? There are good new and even rookie loan officers, but as a rule, experience is a plus. Most situations will fit within the lending guidelines, but there are always wrinkles, in a situation or a property, which can cause problems. If someone has worked with a similar situation before, they may be able to smooth out the wrinkle early in the process before it becomes a real problem.

Does the loan officer work with the type of loan that is best for you? Again, using FHA as the example, if this is the best program for your needs (and it is for most first time home buyers) you want to work with someone who knows the ins and outs of the program.

How well does your loan officer communicate with you? This is a little thing, but one that can make a big difference. Does he return your phone calls in a timely manner? Does he communicate the way that works best for you (phone, email, whatever)? If you have questions, does he get back to you with an answer? If there is a problem, does he tell you about it, or just stop taking your calls? If you aren’t communicating on the same level, expect a frustrating experience.

Have you built a rapport with the loan officer? Going from pre-approval to finding a home and closing on it normally takes at least a few months. During this time you will be relying on your loan officer to give you the best advice throughout the transaction. Do you trust and few comfortable with him? Does the advice make sense to you? Does he understand your situation and your future goals, or is it just a matter of quoting rates? If there is a problem, do you think he will go to bat for you, or take the easy way out?

Buying a new home can be a great experience, but make sure you do your home work first. Picking the right company and the right loan officer will reduce your stress and give you a much better chance of getting to a smooth closing on time.

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