A good lender acts like your partner, helping you get the loan type and loan terms that best fit your needs. The lender will need to know your financial situation, your income, assets, current debts, and credit history in order to be able to tell you what kind of loan he or she can offer you.
The ideal lender will explain all of your options, show you how the payments will differ under various scenarios, and help you decide which loan makes sense for you. Here are some tips on choosing a lender.
When to find a lender
It may surprise you, but you will likely talk to a lender before you see your first property. That is because you will want to get pre-approved for a loan before you go home shopping. Once you get pre-approved, you can stay with your original lender for your entire transaction, or find another lender when you are ready to close the deal.
Three initial questions to ask your lender
As you get into the nitty-gritty of loan shopping, you will likely want to compare rates, points and fees from at least three different sources. Before that, as an initial screening test, consider asking these questions:
1. Are you a mortgage broker or a mortgage banker?
In Colorado, both mortgage brokers and mortgage bankers originate, sell and service loans secured by real property. In a related post, we’ll discuss the pros and cons of each.
2. Are you licensed? Starting in 2008, the federal government passed the Secure and Fair Enforcement for Mortgage Licensing Act (S.A.F.E. Act), which required that states license and regulate mortgage loan originators. Now, mortgage loan originators have to complete a criminal background check and pre-licensing education and exams. They must also provide a surety bond and proof of errors and omissions insurance.
3. Do you have experience placing loans in Colorado? It is wise to choose a lender who has placed loans locally. Colorado has some unique real estate practices, and if the lender has not made loans in our state, then you are taking a risk with that lender.