Forget shopping around. Answer these questions when you look for a mortgage.
There’s a lot at stake when you buy a house.
It’s a decision you’ll have to live with for years – maybe decades. It’s also incredibly difficult to untangle if you don’t get it right. So when the time comes to buy a new house or refinance the one you have, it’s worth taking the time to get it right.
At the same time, shopping around can be a lot of work. It’s possible, however, to find the right mortgage without a lot of hassle. To make it simpler, answer these questions first.
Which lender should I choose?
If you get this right, the rest of your questions will start to fall in line after your first phone call. Start with what’s most important. Surprisingly, it’s not the interest rate, closing costs or the size of the loan.
It’s the relationship.
Without a strong relationship with your lender, nothing else will go smoothly. A lender who knows you and your finances will be wiser about how much you should borrow. You can trust them to offer a competitive rate, and you can be confident the closing costs and fees are fair.
Rule of thumb No. 1: If your mortgage advisor isn’t willing to share their cell phone number, they’re not the right fit. That’s table stakes. It’s our job to be here when you have questions or concerns, no matter when they pop into your head. That includes weekends and after hours. After all, that’s when you have the most free time to fill out paperwork.
Where do I find that relationship?
Start by looking at who you already do business with—your bank. Ideally, they already know you, know your finances and know your history. So they’re automatically in the best position to know what you need.
But before you decide, think about who you bank with right now. Is it someone you trust? Is it someone local? Is it someone you know by name?
Rule of thumb No. 2: When it comes to home loans, it definitely pays to shop local.
The big national banks certainly have the resources to lend you money. And you may even bank with one of them today. But who’s really calling the shots there? Is it someone who sits at a desk in your community every day? Or is it someone in Atlanta? California? New York?
Local bankers are easier to get a hold of and know the market better than anyone else. They’re also most likely to help in all the small ways that make your life easier, like meeting after hours, offering suggestions for home inspectors and related professionals, or by having a relationship with your real estate agent.
Can an online mortgage company do that?
What kind of mortgage should I get?
This is trickier than it seems. You might think there are just a couple of options, and if you go for one of those online lenders that advertise on TV, you’d be right. They’ll happily sell you a cookie-cutter mortgage, maybe even with a reasonable rate, that’s easy to apply for.
Rule of thumb No. 3: Just because it’s easy doesn’t mean it’s right for you.
You have your choice of several types of home loans. You can go with a traditional mortgage, which may be fixed-rate or adjustable. If you’re building a home, construction loans can be a good option. There are even specialty products designed to help low- to moderate-income home buyers, veterans and active duty service members.
If your finances are a little more complicated, a skilled mortgage advisor can design a solution around what you need. There’s no better time to choose a local bank.
Local banks know you and know the marketplace. And if you have your full relationship with them – meaning that’s where you do all your banking – they’ll know exactly what you can spend and how it will affect everything else. They’ll look at your cash on hand, investments, business accounts and other outstanding debts. Then they’ll design a loan that fits perfectly alongside all of it.
Once you feel good about these questions, it’s time to act. But through the whole process, remember:
Don’t fear your bank.
Find a bank that’s filled with people you know and connections you trust. Because no matter your circumstance, it’s worth taking a look at all of your options before moving full steam ahead on a mortgage.
Fran McKinney (NMLS#: 785132) is a mortgage advisor at Pinnacle Financial Partners in Hilton Head. She can be reached by phone at 843-686-1548 and by email at Fran.McKinney@pnfp.com.
