It’s time to say goodbye to dodgy deals and find a lender who will treat you right.
Posted by Joelene
Wed 27 January 2021
It doesn’t matter whether you’re refinancing or buying. Finding a trustworthy lender can feel like a needle in a haystack.
But before you leave that loan officer the 11th unreturned voicemail, or rip up another confusing Loan Estimate, why not make that seedy lender a thing of the past.
You just have to know how to spot the goodies from the baddies.
First things first; make sure lenders want to swipe right on you.
It’s a good idea to make sure you’re an attractive borrower before looking for your lender.
Yes, even if it’s not your first rodeo.
The main three things lenders look for in a borrower:
> Down payment savings
> Your credit score
> All the docs they need to verify your tax, property, and income
Checking this trio off also gives you a ballpark of what rate to expect, which can come in handy when you’re shopping around. Downloading your credit report is quicker than microwaving a Hot Pocket, and gives you a reference point if a lender comes back with some freaky figures.
Speaking of shopping, don’t stop at rates.
Jumping onto a rates table, punching in a few numbers, and getting some pretty nice-looking rates back in 2 minutes is great.
But that’s not where your quest for a good lender should stop.
Getting an indicative rate lets you know what’s on offer based on your numbers, but to really nail down a good comparison, loan estimates are where you wanna be.
If your eyes are glazing over at the thought of actually reading a Loan Estimate — we get it. But it’s actually worth it when it comes down to checking out what lenders are offering, what you could be paying, and spotting any dodgy details.
Parts of a Loan Estimate worth eye-balling
- It might sound obvious, but make sure all of your info is correct including the address if you’ve found a property already.
- Are your loan terms what you discussed? You don’t want any surprises if you’ve already chatted with a lender and confirmed a rate, loan amount/term, and what kind of monthly payment to expect.
- If there’s a prepayment penalty or balloon payment and you’re not feeling too sure about it, it’s a good idea to chat to your lender ASAP.
- What’s the cash to close? This is an important number to hone in on — is it what you were expecting? Lenders can add all kinds of fees to the closing cost. Asking for a breakdown of what you might be paying for is a great way to compare who’s charging for what.
The Consumer Financial Protection Bureau has a full rundown, including a handy example of a Loan Estimate, so you can go out and shop around like a boss.
It’s better to be wary of smooth talk than be swayed by it.
Think you’ve seen all the sales moves to know you’d never fall for them?
We’d all like to think we’re wise to sales games. But when you’re looking around for new lenders, it’s easy to be swept up in promises and rates that look too good to be true.
There are a few signs that should set off a bright red alert in your brain that a lender could be less than legit.
- Getting ‘pre-approved’ seems way too easy. Yeah. Keep an eye on the word ‘pre’ in that sentence. You might have a sweet rate and loan amount in your email, but things can quickly change once those numbers get verified. Going for a verified approval up-front might take a few minutes longer but could save you any potential headaches down the track.
- They tell you high debt or bad credit isn’t an issue. Good lenders want to lower risk for both them and you, and crazy-high rates due to bad credit or a chance that you might not be able to pay off your loan isn’t a good situation for anyone. Steer clear of lenders who don’t worry about that stuff.
- Fees are forever changing. No one wants high closing costs, but it’s even worse when you’re smacked with higher costs than the numbers on your Loan Estimate. It’s an important doc to keep on hand to know if a lender is charging way higher than others and to refer back to in case things go pear-shaped.
- They put the pressure on. If you get off the phone or finish a meeting with a lender with a yuck feeling, or stress over having to make a decision by the end of the day — listen to your gut. A loan is a big deal that you want to feel confident about, not feel pressured into.
Speed date your way to your perfect lender.
We don’t mean a scene of musical chairs featuring you and a dozen potential lenders.
We mean coming to the table with quick questions that separates lenders into the ones who are ticking all the boxes, and the ones who aren’t getting your final rose.
Quick-fire questions to ask before you jump into a loan:
- What kind of fees do you charge? Is there a fee to apply?
- Are there any fees that can be waived and what’s the process for that?
- Who will I be working with to complete my loan application? Is there one point of contact?
- What communication methods do you offer? Text, email, phone, Zoom?
- Can I get a loan rate lock? How long does it last?
- Do you guarantee on-time closing? What is your expected turnaround time?
- What happens post-closing? When will I make my first payment?
- Are payment schedules able to be changed from monthly? Can I make extra repayments?
- Do you charge a prepayment penalty if I pay off my mortgage early?
Make a commitment you feel good about.
At the end of the day, a home loan is a long-term commitment — and not one that you want to regret every time you open up your monthly statement.
Keeping an eye out for dodgy deals and listening to your gut can help you live life regret-free and with a great rate to boot.