Reader gets advice on choosing the right mortgage lender
Q: With all of the news about mortgage companies failing and bad financing, how do I know that I’m getting into a good loan with a reputable company? Should I be concerned about the number of times my loan gets sold to other companies? And, what if a home builder requires that I go through a specific company for financing to buy the new home I want, but I’d rather get pre-approved by my bank. What happens then?
— Carri H., Henderson
A: I’m a Realtor, not a lender. As such, I take pride in knowing when to consult experts in other areas. This is one of those times. To better answer your question, I asked a longtime friend and local expert on such issues, Herman Vander Veldt, who manages a local lending company.
“It is important to know the history of the company, how long they have been in existence and what type of stability they have. The borrower can also check with the Better Business Bureau and the state’s Department of Finance and Mortgage Lending Division to see if there are any complaints filed against the lending or mortgage company. Another item to pay attention to is the appearance of the office for the lending mortgage company you are considering.”
Vander Veldt also made some good points about working with a good loan officer and understanding your responsibilities as a home buyer.
“When dealing with a loan officer, consumers should be informed about the loan officer’s experience. They should also ask for full disclosure on the type of loan program that is being discussed and/or recommended,” he said. “As a consumer, you must ask yourself if you understand all of the ramifications of the loan that is being recommended. For example, do you understand the ARM (adjustable-rate mortgage) program? Are prepayment penalties involved? Is the loan interest-only?”
As for your question about companies selling your loan, Vander Veldt added, “A consumer should not necessarily be alarmed if their loan is sold a number of times. All lenders will pool their loans and sell them in the secondary market to create additional capital to continue the lending process. It is important for the consumer to be aware that when their loan is sold to another investor, federal regulations require that the consumer receive a 15-day notice from the seller of their loan. Additionally, it is required for the purchaser of your loan to send you a letter notifying you of same and when the transfer will be effective.”
To answer the last part of your question, he said, “Consumers should educate themselves on all options available to them. They should investigate what the lender has to offer them as well as seek out information from their lender of choice. They will then be able to compare the options and make a decision on a loan program that best suits their needs.”
I think this is sound advice. I hope that helps you.
Patty Kelley is the president of the Greater Las Vegas Association of Realtors and has worked in the real estate industry for more than 30 years. To ask Kelley a question, e-mail her at ask@glvar.org. For more information, visit lasvegasrealtor.com.