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Spencer for Hire :: Choosing an Online Mortgage Lender

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Where you get a home loan could affect your finances and even your credit rating for years, so it’s important to know as much as possible about your lender. Below are some questions to help choose among the many lenders online.

Is this a direct lender or an online broker? A direct lender funds the loan, making decisions about your eligibility and the terms of the loan.

A direct lender also coordinates required services, such as credit verification and home appraisal. Some web sites provide quotes from many lenders, serving as loan brokers or “aggregators.”

A broker is a go-between, with no power to make decisions or speed loan closing. That’s important if you need to settle quickly. Brokers charge fees for their services, so they don’t always offer the lowest overall prices.

Is the lender experienced? Many online lenders are new to the mortgage industry. Home lending is complex, with many federal and state regulations. An inexperienced lender can face delays and problem in closing loans. Make sure the company has a proven record.

Is the company financially stable? Read their annual reports, quarterly financial reports and business reviews and articles.
Is the organization trustworthy? Research the company’s reputation, including a call to the Better Business Bureau.

Be suspicious of very low interest rates, promises to lend to anybody or high fees to apply for a loan. Make sure that any personal information you provide is protected by online security (including data encryption).

Can you reach a loan expert? Online borrowers often have trouble reaching representatives who can help them. You need prompt and reliable answers to your questions about the loan, the application and any papers you’ll sign during closing.

Does the lender have a local office? If not, where will loan closing occur? A local office can make closing easier and help resolve things more quickly if you encounter a problem before closing.

What services are available after you get your loan? If the lender services your loan (collects your payments and provides escrow and tax information), find out if it offers convenient service hours, e-mail access and online customer service (free electronic payment, online account statements and online escrow reports).

What are the actual loan costs? It can be difficult to compare loans, in part because so many types are available: fixed-rate conforming loans, fixed-rate jumbo loans, conforming adjustable rate mortgages or ARMs to name a few.

The type of loan, whether it’s government backed (FHA or VA), the term (typically 10, 15, 20 or 30 years), and whether there is a penalty for prepayment all affect the interest rate.

The interest rate is only part of a loan’s cost, along with application or processing fees, charges that make up “closing costs” and any “points” or fees paid to buy down the interest rate.

Lenders often have different names for the same fees, making it even harder to compare loans. Make sure the lender thoroughly explains all the loan costs.

For more home loan information, check out these free federal resources:
Looking for the Best Mortgage?

From the Federal Trade Commission: www.ftc.gov/bcp/conline/pubs/homes/bestmorg.htm.

A booklet series on home loan issues from the Consumer Information Center: www.pueblo.gsa.gov/housing.htm

If you have any questions or need my help, give me a call at Countrywide Home Loans 909.248.4830 ext 228.

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