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Q. Where/how do I find a credible list of mortgage companies? I receive calls and emails and regualr mailings from different companies that i have never heard of - how do I Know who to refinace with? -Anonymous
A. Ask people what they look for in a mortgage, and they’ll tell you, “The rate.” But seeking a good rate is a poor way to choose a mortgage company — simply because all lenders get their money from the same place. Therefore, everybody has the same cost of doing business and the same loan programs with virtually the same interest rates.
Thus, it’s rare that you’ll find a “great deal” offered by one firm that another can’t match. But there is one area where one firm can set itself apart from the others: service.
As every home buyer has learned, the mortgage process is an ugly one. You are asked to submit a zillion documents (they ask for them one at a time), and then they want you to reverify what you already told them. Then all the third parties get involved: the appraiser, credit bureau, termite inspector, well and septic people, title company — and nobody ever seems to talk with each other, leaving you to do all the work, worrying about whether it will get done in time for settlement.
Therefore, after you verify that rates are competitive, you’ll be much happier if you choose a mortgage broker or banker who has an excellent reputation for providing high-quality service.
Start by asking friends, family and other professionals you deal with, including your realtor, for references. You can also contact your financial institutions. When you reach out to potential lenders, they should return your call promptly, be open about fees and costs and should not ask for any money upfront. They will ask you to fill out a loan application and your permission to run a credit report. This information will help determine how much money you can borrow and at what interest rate.
Stay away from any mortgage broker that sends you email spam or cold calls you — they may be fraudulent.
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Ric Edelman is Chairman and CEO of Edelman Financial Services LLC, which manages billions of dollars for individuals and families nationwide. Ric is a frequent On the Money contributor and the author of seven books on personal finance, including his new #1 Bestseller, RESCUE YOUR MONEY.
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