How to Select a Mortgage Banker

1. Ask. Ask for recommendations from your friends, colleagues, attorneys, etc. Everyone knows someone. Take someone’s recommendation with a grain of salt. It is still up to you to make the decision. (One word of warning: someone who specializes in residential mortgages is usually not qualified to do commercial mortgages. The residential and commercial real estate industries are two completely different animals.)
2. Investigate. Make a list of several mortgage bankers and ask the following questions (many answers to these questions can be found online): Are they local? How much experience do they have? Do they specialize in your property type? What lenders do they represent? Who will service your loan? Know what you expect from your mortgage banker and what they expect from you.
3. Interview. Hopefully, you have talked with several mortgage bankers by now. If you have not, give your top two picks a call. Take the time to meet with them. Part of the success at getting a mortgage is working with people you know, like and trust. It is possible to do business without these, but it makes the process 100% better when you do.
4. Decide! If you have done your research, got recommendations from others and met with at least two mortgage bankers, you will have all the information you need! It’s up to you to decide who you want to work with. Making the correct choice for your situation will make getting your mortgage an easy and efficient process.

7 Ways to Lower your Financing Costs!

Here are seven ways to keep your financing costs down.

1) Don’t argue with the lender’s attorneys. It just adds billable hours to the attorney’s bill which will get passed on to you the borrower. Loan documents are pretty standard nowadays. Unless there is a MAJOR issue, don’t nick-pick the loan docs. (Savings of $5,000 to $20,000)

2) Find your old reports. A few of the reports you might have include an appraisal, environmental, structural, and ALTA report to name a few. Most of these have a shelf life of 6 months. After that a lender will require a new report be done. So how does this save you money? Call the guy who did the report. He will already be familiar with the property and should be able to do another report for less money than having someone else do a new one. FYI- A good mortgage banker should handle this for you! (Savings of $500 to $2500)

3) Watch the maturity date of the current loan. Make sure you pay off your current loan on or before the maturity date. Most lenders will charge a per diem for each day after the maturity date that you haven’t paid off (or refinanced) your old loan. Usually the per diem is a percentage of the loan amount so it can add up quick. Keep in mind that a typical loan takes 45 to 60 days from start to finish, so planning ahead is important. (Savings of $100s to $1000s)

4) Don’t payoff too early. Most loans will have a prepayment penalty with a small window near the maturity date when there is no penalty. The penalty lessens as you get closer to that open window at the end of the loan. If you time it right, you can refinance your loan during that window and avoid a costly prepayment penalty. (Savings of 1% to 6% of the loan amount)

5) Choose the right type of lender. Certain lenders charge more in fees, require larger reserve accounts or need more reports that other lenders. A competent mortgage banker will know which lenders have the lowest costs. Next week look for a post on the different types of lenders. (Savings depends on lender)

6) Lower the LTV. The more money you put down on a purchase, the lower your Loan To Value ratio will be which can sometimes get you a slightly lower interest rate. (Savings of several basis points)

7) Work with ONE mortgage banker. If you work exclusively with only one mortgage banker, he/she may give you a discount on the fee you are charged. (Savings depends on deal size)

Keep in mind every loan is a unique situation and each lender is a little different. With that said, you can save yourself a big chunk of change if you plan ahead, work with competent people and know what to expect.