How we Decide Which Mortgage Lenders to Recommend

Inside Mortgage Finance recently published the results of their study regarding the role real estate agents play in determining who their clients use to obtain a mortgage.  The survey, Key Factors in the Referral of Homebuyers to Mortgage Originators, found that in approximately one third of all real estate transactions involving a mortgage, the homebuyers relied on their agent to recommend a lender.

Preferred Residential is no different than the 1800 agents in this survey.  We often recommend lenders to our clients but this raises an important question:  How does Preferred Residential go about choosing which lenders to recommend?  Especially since, after the borrower’s offer has been accepted by the seller, it is the lender who has the most control over whether or not the deal closes on time.  With that much influence on the outcome of a transaction we want lenders who can and will get the job done.

First let me say we NEVER receive a referral fee from the lenders we recommend.  It is illegal, in Oregon, for a realtor to receive a referral fee from a lender.

How the lender communicates with us and the borrower is a big factor in who we choose to recommend.  Everyone needs to be on the same page throughout the transaction.  Does the lender respond to emails and phone calls in a timely manner?  Do they communicate what will be expected of the borrower throughout the process?  Do they describe their loan products in a way the borrower can easily understand?

Not all lenders are created equal when it comes to the loan products they have available for their borrowers.  We feel that it is important that the lenders we recommend not try to shoe-horn borrowers into a one size fits all loan.  Each borrower has different needs and while a 30-year fixed mortgage is the most commonly used loan it isn’t the best choice for everyone.  We understand that our clients may not be familiar with all of the loan products available but we want them to be confident that they got the right loan for their situation.

While a 30-year fixed rate mortgage is essentially the same from lender to lender, costs can vary widely.  We look for lenders who are up front about what their fees are.  We don’t like hidden fees or surprises on the HUD-1 closing statement.  The first Good Faith Estimate a borrower gets should be reasonably close to the HUD-1 closing statement.  The lender’s fees should never change from beginning to end unless the amount of the loan changes or the borrower decides to pay points for a lower interest rate.

At Preferred Residential we will never force our recommendations on you.  The final decision about lenders, appraisers and inspectors is always yours.  Now that you know how we choose which lenders to recommend, here are a few links to other websites with information about how to choose a mortgage lender (in no particular order).  GetSmart   FiveCentNickel

About Dan Seim

Dan Seim is the primary contributor to Preferred Residential's blog. He has been writing about real estate issues that affect home owners in Bend and Central Oregon since 2011.