Worst high priced mortgage lenders, and why
Here is a basic list of some of the worst mortgage lender choices, and why:
Your bank is generally a poor choice because they understand that you believe simply because you’ve had a checking account there for years, that they will treat you better and give you a good deal. The reality is just the opposite. Because they know you are already comfortable with them, you are not likely to shop for a mortgage loan elsewhere. The reality is this means they know they can get away being higher priced. They also have higher expenses, like advertising and all the buildings they own, so their margins need to be higher.
BIG INTERNET LENDERS
Just because you’ve seen them on TV or hear their radio advertising a million times saying how Quick In Loans they are, does not make them a good choice. Actually what makes them a bad choice is because of their advertising. You see, all lenders get their money from the same source on the same day at the same time. All lenders have essentially the exact same closing costs, and all lenders are basically going to underwrite to the same guidelines. If they spend millions of dollars everyday advertising, and I don’t, who needs to have a higher profit margin?
YOUR REALTOR’S IN HOUSE LENDER
Real estate companies over the past 15-years or so have all started adding their own mortgage divisions, and have their real estate agents aggressively push you to use their affiliated companies (mortgage and title). They use convenience (they are across the hall), or fear (other lenders won’t close on time) to get you to use their internal mortgage company. Rarely is the real estate agents internal mortgage company the best deal, because again, they know you are now less likely to shop.
GOOD VERSUS BAD REALTOR REFERRALS
It is completely OK for your real estate agent to suggest a mortgage Loan Officer to you. But if they are suggesting their own company, be very suspicious of their motivation for doing so. If they are suggesting an out side mortgage company, it is usually because they know, through experience that this Loan officer does a great job, has low costs, and great interest rates.