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7 Ways to Vet Your Mortgage Lender

Dan Rafter — Fri, 20 Apr 2018 08:30:09 +0000

Buying a home is one of the biggest purchases most consumers ever make. And yet many of us put little to no thought into getting a mortgage loan or the lender we'll work with during the process.

This attitude can cost you. In 2015, the Consumer Financial Protection Bureau found that 47 percent of mortgage borrowers didn't shop around for lenders. The CFPB also found that those applying for a 30-year, fixed-rate mortgage could qualify for interest rates that varied by more than half a percent. This may not sound like much, but the CFPB noted that the difference between 4 percent and 4.5 percent could result in savings of $60 per month, or $720 per year.

So how do you make sure that the mortgage lender you choose will offer you the best deal and the best service? You need to vet these financing professionals.

1. Ask your real estate agent, but also shop around

Real estate agents work with plenty of lenders and should be able to recommend a mortgage loan officer. Because they want their clients to refer them to other buyers and sellers, they tend to recommend loan officers and lenders who provide good service and prices.

But don't automatically take your real estate agent's recommendation. Talk to friends and family members who recently took out mortgage loans. Did their lender do a good job for them? Do they wish they'd worked with a different one?

Search mortgage comparison sites such as LendingTree, too. LendingTree lets you put in your basic financial information and receive preliminary offers from lenders seeking your business. Just be aware that there is no guarantee that these preliminary offers will match the final offers lenders make should you formally apply.

Once you have a list of lenders and loan officers, contact them. It's now that you can ask them questions to help determine if they are worth working with.

2. Do some rate and fee comparisons

When interviewing lenders, ask them how much their borrowers typically pay in closing costs. These are the fees that lenders and other third-party providers, such as real estate attorneys and title insurance companies, charge to originate your mortgage loan. These fees can quickly add up, often totaling 3 percent or more of your loan amount. Ask the lenders you are interviewing, too, what interest rate someone with your finances can expect to be charged.

Be careful, though: Some lenders might quote you a lower interest rate, but charge you a higher closing fee at the same time. Make sure to consider both the rate and fees. (See also: Here's What's Included in a Home's Closing Costs)

3. Ask about closing times

Originating a mortgage loan takes time. You can expect to wait 30 days or more between the moment you apply for a loan and the day you sign the papers. But some lenders are faster than others. Ask your lender how long it takes borrowers on average to get to the closing table. If most lenders say 30 days, but one says 60? You might want to skip working with the outlier. (See also: How Long Does It Really Take to Close on a House?)

4. Ask your lender to explain the entire lending process

Most of us aren't familiar with how the mortgage-lending system works, so it's important to work with lenders who can explain this often-complicated process clearly. If the lenders you are interviewing can't or won't do this, find a new one to vet. (See also: 5 Homebuying Questions You're Embarrassed to Ask)

5. Ask to speak to past clients

Ask your lender to provide you the names and contact information of at least three past clients. When you get a hold of these referrals, pick their brains. Ask if the lender responded quickly to phone calls, if the closing costs they charged were higher than expected, and if they fixed any problems that popped up during the lending process. If lenders balk at providing referrals, don't work with them.

6. Do your online research

Once you've found a lender you like, do some online research. Check out sites such as Yelp or Zillow to find online reviews of the lenders you are considering. If a lender has an overwhelming number of negative reviews, you might want to steer clear.

7. Get preapproved

During the preapproval process, a lender will run your credit and verify your income. You help the process along by sending copies of financial documents such as your recent paycheck stubs, bank account statements, and income tax returns. Your lender will use this information to determine how much loan money they are comfortable giving you, and will send you a letter stating the results.

The best thing about preapprovals is that they are free. If you find three lenders you like, get preapproved with all three. You aren't obligated to work with any lender that preapproves you. But you might discover that one lender approves you for $200,000 while two others approve you for loans as high as $250,000. This could influence which lender you finally choose.

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

9 Ways to Vet Your New Employer

Tim Lemke — Tue, 27 Mar 2018 09:30:19 +0000

If you have been contacted for a job opportunity, it may be a very exciting moment. But you also want to make sure the position is right for you. Will you fit in with the company's work culture? Is the organization on stable footing? And how do you learn about things like benefits or vacation policies?

This potential new employer wants to know all about you, so you should try to find out as much as you can about them, too. Let's examine these ways that you can vet a possible employer.

1. Ask questions during the interview

We assume that a job interview is all about the employer peppering a candidate with questions. But in many cases, it's just as much about them wanting you to feel comfortable in the role. In every job interview, you will usually be presented with the chance to ask questions, and that's when you can find out many things about the job and the company's mission and culture. This will also help you get a better sense of whether the hiring manager is someone you'd like to work for. Many employers will actually view you negatively if you don't ask questions, because it may suggest a lack of interest in the company or the position.

There is one word of caution, though, which is to avoid asking too many questions that might indicate you're only pursuing the job for the money or the perks. For example, asking only about vacation policies, salary, or benefits may backfire. While those are important questions, they can be addressed if you get an offer. (See also: 5 Questions You Should Ask at Every Job Interview)

2. Online reviews

There are a number of websites that offer the chance for employees and former employees to share information about a company. It's worth noting that some of these sites can skew to the negative, as workers may only be inclined to leave a review if they have a complaint. But many of these reviews are simply rundowns of objective facts on things like salaries, benefits, vacation time, and workplace policies. Popular review sites include Glassdoor, Indeed, and Careerbliss. There are also review sites for specific groups, including Fairygodboss, which is focused on women in the workforce. Searching LinkedIn may also reveal some reviews from current or former employees.

3. Talk to current employees

It's not a good idea to cold call people you don't know, but if you are friendly with people within the company, it's a great idea to pick their brain. Do they like working there? How would they describe the workplace culture? Is your potential supervisor someone you might enjoy working for? Your friends will likely put a positive spin on things if they like working there, but they'll also be happy to share any information that will help you succeed. Similarly, they will also let you know if they are unhappy. (See also: 10 Warning Signs Your New Boss May Be a Bad Boss)

4. Social media

Performing searches on Facebook, Instagram, and Twitter may reveal some details about a company. Employees may post updates on projects they are involved in, suggesting that they are proud of the work they are doing. You may come across photos of people at work functions, appearing to have a good time. The company may also post information about awards or promotions, indicating that they celebrate workers who are succeeding. On the flip side, you may come across workers venting their frustrations about the company or their boss. Be sure to take all complaints with a grain of salt, but if your social media searches reveal a barrage of negativity, be wary.

5. LinkedIn profiles of current and past employees

You can glean some details about a company by looking at the LinkedIn profiles of those who work there and those who worked there in the past. If the employees seemed to have long tenures in numerous roles with increasing responsibility, that's a good sign. But if it seems like workers don't last long, that could indicate a problem. (When scanning LinkedIn profiles, be sure to browse incognito so people don't know you are checking them out.)

6. The company website

Obviously, organizations work to make themselves look good online. The messaging on websites is usually designed to cast a positive image of the organization, its work, and its employees. But if you dig around, you can find a lot of objective information about workplace policies, such as 401(k) plans, health benefits, telecommuting options, and more. In addition, public companies are required to release financial information, so you can have a good sense of whether the company is doing well or not.

7. "Best Places to Work" lists

Many local and national publications produce annual lists of companies that have a good reputation among workers. These lists will celebrate organizations with above-average salaries and benefits, and highlight those firms with perks like free food, generous vacation policies, or flexible work schedules. These lists may not necessarily help you learn if you'll like your boss or the job itself, but you may be happier if the company finds itself on one of these lists.

8. News articles

When it comes to companies, sometimes no news is good news. It's one thing if your prospective employer is in the news for the successful launch of a new product, or for hiring 1,000 new workers at its headquarters. But if the company is in the news for poor handling of sexual harassment complaints, that's bad. News about mass layoffs, poor earnings, or changes in leadership may also be red flags, though it's important to know the difference between temporary, fixable problems and those that are indicative of larger issues.

9. The Better Business Bureau

The Better Business Bureau is designed to help consumers, but it can be useful for prospective employees, too. Most people would prefer to work for a company that has high marks for customer service, as opposed to one that gets a bad grade. Complaints received by the BBB can also help you glean whether there are systemic problems within the company. The BBB is geared toward offering information about contractors and charities. If your company does not have a BBB profile, that's neither good nor bad.

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This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: