Asking Lenders 10 Questions

Mr/Ms. Mortgage Lender... Please Answer These 10 Questions:

• QUESTION
  Question 1 - If provided a copy of the credit reports for all three credit bureaus, run in the last 30 days, will you provide an accurate quote of fees, rates and terms (their version of an unofficial Good Faith Estimate) subject ONLY to confirmation when they personally pull the credit and of course subject to knowing any other material changes from the information supplied to them? Answer -

  This is fairly obvious. Your Credit Score gets dinged with every Mortgage Lender that checks your Credit. Working with a lender that will share the credit reports and scores with you means that you can eliminate all but the final credit check by a lender.

• QUESTION
  Question 2 - If you are authorized to pull the credit will they provide you full and complete copies of the credit reports, that include the 3 credit scores, so that you can share that information with other lenders to shop for the best rate, terms and programs? Answer -

  If they say NO to Question 1 AND Question 2 then I personally would suggest you stop talking with them and there is no need to ask the remaining questions. If they say No to question 1 but yes to question 2 than if you like the rest of the answers below you may want to consider having them (vs. another lender initially) pull your credit. Although my gut is when all is said and done that you will end up working with another lender which means yet another credit check that means the first one was not needed.

• QUESTION
  Question 3 - Do they have local processors and underwriters to process, review and approve the loan or do they need to ship the documents to another location in another city for review and approval? Answer

  If they say they need to ship the documents then I would personally not work with them since this can cause a delay in your approval and is much more impersonal. This disconnected approach also means the loan officer, you are working with, probably has less clout to get the underwriters to work with special or unique issues related to your credit, the loan or that property.

• QUESTION
  Question 4. - Do they accept faxes and scanned documents and have the ability to securely transmit documents to you or do they require ONLY originals and require that all documents be sent only via 'snail mail', overnight delivery or by courier? Answer

  If they do not support electronic copies and/or delivery I would not work with them. I think this says a lot about their mind set, the number of mortgages they complete and their commitment to be easy to work with.

• QUESTION
  Question 5. Do they have their own internal ('related') Appraisal Management Firm where there is at least some control on the quality, experience or expertise of the Appraiser? Answer

  If they say no and they are working with a 100% disconnected Appraisal Management firm I would not work with them since there is no way to know if the Appraiser will be familiar with the area the property is located in vs. another city or county nor is there a way to know if the appraiser that comes out does a lot with that type of property… like single family residences or one of the many different types of condominium homes etc.

• QUESTION
  Question 6. Will they provide their clients AND their client’s REALTORS with their cell number so that when necessary they can be contacted after hours? Answer 

  If they say no, I would not work with them. There are too many times when a place surfaces after business hours where you want to move on it and special issues, questions or needs arise. Not being able to talk with your lender could mean the difference between getting the perfect house or losing the perfect place to another buyer while you are waiting to hear back.

• QUESTION
  Question 7. Will they provide their client’s REALTORS with a word version of the pre-approval letter that lists the Maximum loan and purchase amounts so that the Realtor can adjust down as necessary and provide a pdf version with an offer? Answer 

  If they say no, I would not work with them. There are too many times when a place surfaces after business hours and you want to "move on it" and it’s not in your best interest to reveal in a pre-approval letter that indicates you can spend more than your offer. Waiting on your lender to generate a new pre-approval letter for that particular property or that offer amount could mean the difference between getting the perfect house or losing the perfect place to another buyer while you are waiting on the lender.

• QUESTION
  Question 8. If you start the loan application process with them and for any reason they are unable to continue working with you, to give you the mortgage, will they with appropriate release authorization from you, courier ALL of your file documents to another lender of your choosing including ALL of the documents allowed by law to be shared with other lenders? Answer

  If they say no I would not work with them. This happens on occasion that something surfaces, and a lender will not be able to get you the mortgage. Starting over at ground zero with a new lender could mean the difference in you getting the home you want since you have a limited amount of time to close and after that point in time the seller can decide to terminate the purchase agreement. You might think a seller would continue but often there could be back up offers, they could be concerned about your ability to obtain financing and/or they might have other reasons that they change their mind.

• QUESTION
  Question 9. Do they offer some sort of Interest Rate reduction program if the interest rates decrease from the initial time you make loan application before you close? In other words, if they quote you a rate when you make loan application, and the rates decrease will your rate automatically cap at the new lower rate? If they have a program what are the terms and conditions and are there fees related to this option? Answer 

  This is pretty much self-explanatory, but the goal is to make sure that your rate will never be higher than what they quote you when you make loan application and that it will automatically decrease if interest rates decrease.

• QUESTION
  Question 10. What percentage of the mortgages will the lender service or “hold” themselves vs. sell to other lenders? What are the odds, if they sell mortgages, that they will sell yours? Answer 

  If part of your decision is based on the notion that you will be working with the same lender or loan officer, after you close, then you should know how probable that is to occur.