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WHERE TO GO FOR A MORTGAGE
By Kenneth A. Redding Attorney at Law

In the olden days, not so very long ago, most people would apply at their local bank to get a mortgage. Interest rates were basically the same from one bank to the next. Today, although the mortgage market is much more complicated, many people still go to their local bank. Are these people getting the best mortgage available? Possibly, but they may be able to do better.

Where to Look
The advice I give my clients is to shop around. Realtors and attorneys can often recommend lenders with whom they have had a good experience. A personal recommendation is very important and should be given serious weight. In addition to following these leads you should call local lenders, check the newspapers and, to really see what is available, contact one or more mortgage brokers. Why consult a mortgage broker? There are several reasons. The mortgage market is far more complex than it used to be and there are now dozens of programs available. Mortgage brokers are professionals who have access to many local lenders as well as lenders who cannot be found in the newspapers. These lenders, who originate loans through mortgage brokers are called "wholesale" lenders. Because mortgage brokers have more alternatives, they can help find the loan which best fits your situation.

Mortgage brokers also have access to "nonconforming" lenders. These lenders can make loans to people who may not qualify for "ordinary" loans. Unfortunately, many of those who could be helped by these loans are unaware of the possibility. There is no additional cost of going to a mortgage broker and there is no consultation fee. The wholesale lenders who use mortgage brokers save on the costs of originating and processing the loans. The brokers, therefore, are either paid directly by the lender or receive a portion of the "points." Other fees, such as application fee, credit report fee and appraisal fee usually correspond to those charged by "retail" lenders.

Expect Service
Whether you go directly to a bank or through a mortgage broker, you can expect a higher level of service than was previously available. Most lenders and all mortgage brokers will come to you instead of you going to them. The emphasis is now on personalized service. The degree of service, however, can vary widely from one lender to another and it is vital that you trust and have faith in the person handling your loan. This is why that personal recommendation is so important.

What to Ask
When gathering information, the first questions should concern the rate. What will the rate be? Is the rate "locked" and, if so, for how long? If the rate is not locked, can it be locked at a later time? What happens if interest rates go up or down? The next questions should concern expenses. How much will the loan cost? It is often difficult to compare costs because some lenders may lump fees together. A borrower should establish and compare the total expenses. How long will the process take? Could there be any problems qualifying for a certain loan program? A borrower should take the time to ask these questions.

The Final Decision
After weighing all the various options you may still end up getting your loan from the neighborhood bank, or you may use a mortgage broker. Either way, the important thing is that you make an informed decision.