Unless you’re paying cash, you need to get “pre-qualified” or, better, “pre-approved” for your mortgage loan before you start shopping for your home. Even before that, however, you need to understand the loan process and how to select the right lender.
Whether you’re buying a car, an appliance or a mortgage, it’s the nature of today’s marketplace that many of the people seeking your business are putting their financial gain ahead of your financial benefit. That’s why many industries, including real estate and mortgage lending, are licensed and regulated.
In the past, real estate agents have been described as just above used car salesman in terms of trust. But there’s a big difference. We Realtors could lose our license if it were proven that we didn’t put your interest ahead of our own. A used car salesman doesn’t even have a license to lose.
This is not to say, however, that there aren’t ways in which any professional can steer a client in a direction which benefits them at the expense of their client — whether financially or otherwise.
I remember before the financial crash of 2008 learning that loan officers earned a bigger commission from selling sub-prime loans than conventional loans, incentivizing them, in effect, to steer borrowers toward such loans even when they qualified for a conventional loan at a lower interest rate.
Back then, loan officers weren’t licensed or fingerprinted, as they are today. A felon could literally walk out of prison and represent himself as a mortgage broker and, as a result, get personal information, including Social Security numbers, from home buyers seeking a mortgage loan.
Today, every mortgage broker is licensed and must display his/her license number on their business card and on all advertising. (Real estate agents don’t have to do that, but you know we’re licensed because we wouldn’t have access to the MLS without proving we’re licensed and we can’t be licensed without proving we have Errors & Omissions insurance to protect our clients as well as ourselves.)
But how do you select the best mortgage broker, the one most likely to serve you with the highest degree of fidelity and integrity and the lowest degree of self-interest?
Number one, do not find your lender on the internet. I have found few internet lenders to be worthy of my clients’ business. You are far better off using a human and local lender recommended by a Realtor whom you trust. Your Realtor will only recommend a lender who has a positive track record with other clients. We have several trusted mortgage lenders on our smartphone app, which you can download free from the App Store or Google Play. (Search for “Golden Real Estate.”)
One cautionary note: If your Realtor recommends only the lender with which their brokerage has a financial arrangement, be sure to ask for a second lender to interview. You may pay more using their lender.
Published March 9, 2017, in the YourHub section of the Denver Post and in four Jefferson County weekly newspapers.