I’m Erika Warfield, Client Experience Director, here to answer some of the most asked questions by inquiring minds as it relates to all things mortgage.
The first question is a big one, and I’m sure you’ve asked it of yourself and have been burning the midnight oil with your Google searches.
Well, search no more, because you’ve come to the right place for answers…
How to select a lender is of the utmost importance to your success in landing your dream home.
So, what qualities and experience should you look for in a lender and loan officer?
The first thing under your microscope should be REPUTATION.
Reputation – To separate the wheat from the chaff quickly, you have to do some homework. Don’t rule out a smaller company just because they are unfamiliar to you. Quite the contrary! Be sure to check their ratings and reviews with the Better Business Bureau, the Chamber of Commerce, Lending Tree reviews and awards, Client Testimonials, etc. You might just be more than pleasantly surprised.
If you are thinking about a big-league player on the block with huge name recognition, you still need to ask yourself a couple of questions:
What is this company’s MAIN business endeavor? Is it mortgage lending?
If not, you could have major issues down the road.
The second thing to examine should be SERVICE.
Service – There are many elements to great customer service. And, you should expect nothing less than great customer service, because buying your home is one of the most important investments you will ever make.
From the time of your Mortgage Application until the time you close on your new home, you should have nothing but stellar service that won’t upset the delicate balance of your professional and personal life.
Your prospective loan officer should serve as an outstanding educator, communicator, and facilitator of the entire transaction process, offering transparency, minimizing stress, and maximizing success to all.
Upon your first conversation with your loan officer, note the following:
Did your prospective loan officer give you a good first impression? If so, what was that first impression?
Did your prospective loan officer show any interest in you and your situation whatsoever? If so, did he/she ask you questions about your goals, your vision, your finances, your budget, and how long you plan on living in your next purchase?
Did your prospective loan officer answer your questions thoroughly, concisely, clearly, and with common-sense language?
Were you pressured to take any action before you were ready to?
Finally, be prepared to jump into the different PRODUCTS and PRICING.
Products and Price – Here is where you will notice much similarity among mortgage companies. They all offer pretty much the same mortgage products, and the most popular go-to products are the 30-year fixed rate mortgage or the basic adjustable-rate mortgage.
So, aside from products, now what you have to keep in mind is pricing and customer service excellence; and, again, we mean the type of customer service that is bordering on fanatical client advocacy that always puts you, the consumer, first in all things.
Your prospective loan officer should be asking you those questions that take into account your lifestyle, budget, goals, etc. At Great Western, your loan officer will present you products that best fit your specific needs and situation.
What is the purpose of a credit report and credit score?
The importance of your credit report and score cannot be over-emphasized. In fact, your credit worthiness is what helps your prospective loan officer select the best product for your circumstance.
So, here’s a breakdown of that process. Your prospective loan officer will pull your credit history from all three of the major third-party credit-reporting agencies, that is – Equifax, Experian, and Trans Union.
Once all three of the agencies confirm your financial account balances and credit history in general, they each assess a “credit score” to you, from which your prospective loan officer can ascertain what mortgage product you qualify for and will work best for you.
And, then… it’s off to the races you go!
How is my interest rate determined?
Three Critical Factors that Affect Your Interest Rate
There are many factors to consider as you go through the mortgage process, including how to qualify for the best interest rates and terms on your loan. Your Great Western Loan Officer can go further in depth discussing the specifics of your unique loan application, but overall these are the three main factors that lenders usually consider when making loan offers:
Your lender is going to assess your history of repaying your debt and managing your finances, also known as your creditworthiness. Basically, what they are examining is whether you’re going to be a risk based on how effectively you’ve paid back your debts in the past.
Consider your credit report and FICO score when you evaluate your own creditworthiness.
Capacity has to do with your ability to repay your loan with your assets and income. Can you comfortably make payments on your loan and still pay back other monthly bills? Consider your expense-to-income ratio, as well as your overall savings and employment stability.
When lenders evaluate your collateral, they are looking at how your future property could be used to repay your loan, based on down payment, property value and type, occupation, and other factors.
Want to know more?
Feel free to ask your Great Western Loan Officer any questions about the three critical factors and how you can get the best loan for your situation!
What are discount points?
Lenders use discount points to lower the interest rate on your loan. Typically, one (1) discount point equals 1% of the loan amount, and this discount fee is charged at the time of closing as a line item on your Closing Disclosure.
How much will I need for closing costs?
Closing costs always depend on the loan itself. You and your Great Western Loan Officer can decide what is best for you based on the type of loan you have.
Depending on your home state, anticipate some, if not all, of the following amounts for closing costs:
Appraisal Fee – The appraisal fee will vary based on dwelling location, type of loan transaction, additional inspection costs, etc.
Credit Report Fee – Charge for pulling your credit report from the credit bureaus. (Refer to the Credit Report question in this FAQ Section).
Discount Points – Used to lower the interest rate. (Refer to the Discount Points FAQ Section above).
Flood Certification Fee – The Flood Certification Fee is used to determine what, if any, flood zone the home is located in. When applicable, flood insurance may be required.
Origination Fee – This fee varies per loan transaction.
Processing Fee – Payment to the lender for services provided.
Recording Fee – Payment for filing fees depending on the state.
Settlement or Escrow Fee – Payment to the title company for closing your loan.
Title Policy – This fee is based on insured amount for title insurance purposes. Percentage can vary on refinance transactions.
Underwriting Fee – Payment to lender for services provided.
Note: Many of these costs are third-party charges and cannot be negotiated by you or your lender.