Shopping for a mortgage lender

-Read the fine print and understand it.
-Ask upfront what the closing costs are estimated at.
-Get referrals from people you trust.
-Be prepared to receive a preapproval but not able to close the loan because of issues with any combination of the lender, property or borrower and have to switch lenders mid-stream.
-Use a somewhat local lender. They know the housing stock, the local guidelines, the local players and have skin in the game. In my experience, out-of-state lenders care less about referrals and will typically go through the motions, but won't go above and beyond.

When my wife and I were in the process of buying a house, we spoke to two mortgage brokers - both referrals. The first was from Countrywide (don't even remember his name). He took several days to call me back and when he did, he spoke as if he was in a hurry and didn't really answer my questions.

The second broker was spoke to is with Bank of America and she was referred to us by our buyer's agent. She was very nice and patient with me, taking the time to answer all of my questions (as a first time home buyer, I had a lot of them). I would be happy to share her name with anyone looking for a broker, but I don't know if that is appropriate for the comments here.

don't just ask about the closing cost, get a breakdown in writing. See if something was intentionally omitted to be "lower than the other people"

If a rate is too good to be true when compare to others, it's too good to be true.

USAA

Basically the best bank in the entire country. Top notch customer service, and proves that by winning basically every customer service award out there year after year. Honest people giving real advice throughout the entire process.

I closed in the first quarter of this year on my home and they were awesome. I got the best rate around and they called me multiple times to just see if I had any questions or needed anything. They took care of all the paperwork with just one FedEx envelope back and forth, that was it.

The only problem is that you have to be military or military-related in order to bank with them.

I am in the business and work for a large regional bank in the Southeast that doesn't have a New England presence. I am from Boston, but live in Tampa. There are three things to concern yourself with...loan program, rate and cost. If you're shopping for a 30 yr fixed loan, that's pretty easy to compare. Something like construction can be a little more difficult. If you get a number of good faith estimates from various lenders, you'll probably notice all the charges vary and can seem extremely different. The trick is to try and get everything as close to an "apples to apples" comparison as you can. Have all lenders use 15 days of prepaid interest instead of varying amounts. Have them all use the same tax and insurance figures. Ultimately, insurance and tax figures are going to be the same no matter what lender you use, so don't be as concerned with those. Just make sure they're using the same number and it's close to what you expect to pay. If you know who the title attorney is handling your transaction, call them and get a breakdown of their costs. Advise all the lenders you speak with to use those numbers in their estimate. This should bring you to lender fees. Ultimately, that's what you want to compare. Also, interest rates literally change every day, sometimes multiple times within a day depending on market activity. I would advise to get your quotes on the same day if possible. This will help ensure "apples to apples". You don't need to do a whole application for a quote, but credit score and loan to value can make a difference on the rate quoted. So, try to have an idea what those look like ahead of time. My one warning...if you are purchasing a home and one lender is giving you a quote that seems much better than everyone else, be careful. Not to say it isn't true, but greedy, shameless loan officers are still out there. They know that they can quote low to get the deal, surprise you at closing with a higher rate or higher costs and know that most people aren't going to walk away from the closing table when their new house is a few signatures away. This isn't the norm and I don't mean to scare anyone, but buyer beware...it's out there. Once you choose who will handle your loan, ask for a rate lock confirmation. This is a guarantee that as long as your loan FUNDS within the time the rate lock is good for, you will get that rate. Just make sure your rate lock isn't for 30 days when you're closing in 40 days. Sorry for the long comment, just trying to help and inform. Good luck...

I find that most lenders will be within .125% to .25% of each other (assuming a standard 'off the shelf mortgage' - and not a super jumbo or a subprime). The difference is typically made up in the closing costs.

Given that most lenders sell to the secondary market in one way or another (i.e. to the same investors), the difference comes out in the fees and/or the yeild-spread premium (sombody correct me if I'm wrong).

I always tell my clients that when they are 'rate shopping' to do so ON THE SAME DAY due to the volatility of the mortgage market. They may get a quote on Tuesday from one lender, then get a different one on Wednesday from another - but fail to check the Tuesday lender (who may be actually lower).

To me, it all comes down to Service! Saving an eight of a percent doesn't make a huge difference - unless the originator cant get the loan funded - or the closing costs are outrageous.

True Story: I was actually at a closing a few years ago (representing a seller client). The buyer asked the closing attorney 'What are points?". The attorney asked 'Why?" Buyer "Because I'm paying 5.5 points. What are points?" As I am holding back, the attorney explained that a point is equal to 1% of the loan amount. The buyer shrugged and said "uh... OK" and the closing went on. Oh, and neither the buyer's agent nor the loan officer was present at the closing.

The buyer got a 'great rate' from an out of state Internet lender, but apparently 'paid for it' on the back end. (I felt like offering the buyer a cigarette after that one, if you know what I mean).