Top 10 Questions to Ask a Lender
1. Are you a bank, banker, or broker? A bank is where you will get the best deal (lowest fees). Many banks DO NOT charge a loan origination fee. Brokers many times will charge a loan origination fee. Loan origination fees equal 1% of the amount borrowed. If you have good credit (FICO above 620), and nothing unusual on your credit report, you may consider going straight
to the source and skip the middleman. If you have bad credit or are
self-employed showing little income, you may need to work with a broker who
can find a loan to fit your needs.
2. Do you charge a loan origination fee? It's important to ask. If you don't want to pay the loan origination fee, this will eliminate many bankers and many of the brokers.
3. Do you collect a Yield Spread Premium? Yield spread premiums are a kickback the lender receives for charging you a higher interest rate on your loan. Sly lenders knowing consumers don't want to pay loan origination fees are saying NO to loan origination, and at the closing are receiving a yield spread premium instead.
4. Do you do automated underwriting? The best lenders try automated underwriting BEFORE issuing a "Conditional Loan Approval" this avoids last minute surprises and greatly speeds up the lending process.
5. If you do not do automated underwriting, do you have an in house underwriter? In house underwriting gives the loan officer a chance to sit down with the underwriter and understand what is needed to get your loan approved. Lenders who do not have in house underwriters will submit your package several days before you close. If there are additional documents required by the underwriter, your loan may not close on time as you scramble to acquire these last minute requests for documents.
6. How many days before close do you deliver the loan packet to the Title Company? Good lenders will have the package to title at least 2 days before close. Once signed the package needs to go back to the lender for final review by the underwriter. Lenders who deliver the packet on the same day of close means there will not be enough time to get it back for underwriting for final review and to close on time.
7. Do you table fund? Table funding means the investor funds your loan proceeds via a wire transfer to the Title Company. Investors that are thousands of miles away take longer to fund and may create last minute surprises because of the distance the packet needs to travel.
8. How often do you check your messages? There is nothing more frustrating than a lender who won't return phone calls.
9. Do you update Weekly? Would you update me weekly on my loan status and walk me through the entire process from start to finish?
to the source and skip the middleman. If you have bad credit or are
self-employed showing little income, you may need to work with a broker who
can find a loan to fit your needs.
2. Do you charge a loan origination fee? It's important to ask. If you don't want to pay the loan origination fee, this will eliminate many bankers and many of the brokers.
3. Do you collect a Yield Spread Premium? Yield spread premiums are a kickback the lender receives for charging you a higher interest rate on your loan. Sly lenders knowing consumers don't want to pay loan origination fees are saying NO to loan origination, and at the closing are receiving a yield spread premium instead.
4. Do you do automated underwriting? The best lenders try automated underwriting BEFORE issuing a "Conditional Loan Approval" this avoids last minute surprises and greatly speeds up the lending process.
5. If you do not do automated underwriting, do you have an in house underwriter? In house underwriting gives the loan officer a chance to sit down with the underwriter and understand what is needed to get your loan approved. Lenders who do not have in house underwriters will submit your package several days before you close. If there are additional documents required by the underwriter, your loan may not close on time as you scramble to acquire these last minute requests for documents.
6. How many days before close do you deliver the loan packet to the Title Company? Good lenders will have the package to title at least 2 days before close. Once signed the package needs to go back to the lender for final review by the underwriter. Lenders who deliver the packet on the same day of close means there will not be enough time to get it back for underwriting for final review and to close on time.
7. Do you table fund? Table funding means the investor funds your loan proceeds via a wire transfer to the Title Company. Investors that are thousands of miles away take longer to fund and may create last minute surprises because of the distance the packet needs to travel.
8. How often do you check your messages? There is nothing more frustrating than a lender who won't return phone calls.
9. Do you update Weekly? Would you update me weekly on my loan status and walk me through the entire process from start to finish?
10. If the interest rate lock is free, how long in duration is it? A 30 day lock should be all you need. I recommend you lock at a rate that you can live with. Trying to catch the absolute bottom in rates is impossible and adds stress to the home buying process.
If you need a good lender call me, Terry Smith
1st U.S.A. Realty Professionals (602) 763-1858
1st U.S.A. Realty Professionals (602) 763-1858
