How To Compare Mortgage Lenders for Florida Home Loans
You'll buy your new SW Florida home with your heart, but you need to do a Florida home loan with your head! Always, always, always decide upon your mortgage lender prior to shopping for a home. Only an experienced and trustworthy lender can help you avoid any pitfalls in the mortgage approval process. There is nothing worse than paying for an appraisal or home inspection on your dream home and finding out that, for whatever reason, your loan is not approved after working 30-45 days with a lender. And, it happens more often than we would like to think about.
With all the new loan products available, the mobility of the U.S. population, and the cost of homes sky-rocketing - "your mortgage" is as important as your purchase and requires the same care and consideration. And, you will most likely get the home if you have a loan commitment/approval letter versus a pre-qualification letter. Pre-quals mean absolutely nothing in the lending world and even less to savvy sellers.
We know how anxious and a little crazy shopping for a mortgage can get so here are some tips on how you compare one lender to another. Remember what your Mother always told you - "If it sounds too good to be true" - then it probably is. That adage holds true for mortgage financing more than any other industry we can think of. Reputable lenders should be "close" to one another in what they quote you, not far apart. And, if one is extremely low and another extremely high, perhaps you should get the details before making the decision to proceed. Florida is a high loan closing cost state, it has charges that are not common in other areas of the country, and housing here is expensive to say the least. An expensive mortgage could be very difficult to live with and even harder to change - it will cost you more money. You don't want unpleasant surprises when you arrive at closing. And, one other thing - a good lender will tell you "all of the charges" to acquire your Florida home - not just some of them. It does you no good to focus on a interest rate quote and then find out later you're short of funds to close the transaction because the lender didn't give you all the information you needed to know.
Fact Number One:
Look for a mortgage banker versus a mortgage broker. There is nothing wrong with mortgage brokers, but they do not have the ability to approve your loan prior to submitting it to the mortgage lender that actually funds your closing. That takes time you may not have. You should be able to get a true loan approval letter within 24 to 48 hours. That is unless you have credit issues. When dealing with a mortgage banker that sells directly to large institutional wholesale lenders - it's a little like buying the car directly from GM instead of going to the dealership - wholesale is always less expensive than retail.
Fact Number Two:
Ask for a good faith estimate in writing from all the lenders - usually it takes about a half an hour to prepare and email a good faith estimate to you. Then look "hard" at the Section 800 charges. Section 800 is where the lender puts their fees and also how we calculate the APR. This is comparing "apples to apples."
The Section 800 charges will be where things like an appraisal, credit report, administrative fee, tax service fee, courier/wire fee, flood letter, doc prep, discount and origination points will appear. These are actual lender fees. All other sections contain fees that should be relatively close in amounts and are what is usual and customary in your geographical area, e.g., the cost of title insurance, recording fees, surveys etc.
Section 900 - is where your escrow account and pre-paid insurance and interest information will appear; Section 1000 - your prepaid reserve homeowner insurance and tax escrow items; Section 1100 - title company charges; Section 1200 - recording fees and Section 1300 - additional settlement costs relating to your home purchase i.e. survey, termite inspection etc. The sections other than 800 should pretty much be the same no matter who is "quoting" you. They are not actual lender closing costs - they are your home "acquisition" costs.
Fact Number Three:
Do not select a lender based just on interest rate alone. The quoted rates should actually be very close to one another. If one lender's rate is significantly lower than other rates on the web, or quoted by other lenders, or in the Sunday newspaper - then guess what - they are most likely being based on a "today's rate" quote. Well, you aren't closing today, so that's not too helpful, is it? And, since you aren't closing today, an unscrupulous lender can tell you anything - just to get you to apply. Interest rates are marketed by large, institutional wholesale lenders - mortgage brokers and mortgage bankers "sell" your mortgage to these wholesalers. And guess what? Most wholesalers have nearly the same rates. There are some minor variations, an 1/8th of a point maybe, but not much more than that, so beware! Ask which wholesaler they are quoting you from and what time period is the "pricing" good for, e.g., quoting a 30 year fixed rate from Chase Manhattan on a 30 day interest rate lock. If a mortgage broker or mortgage banker will not tell you which wholesaler they are currently quoting - then it's most likely not a valid rate.
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Page Authored by Benjamin Dona of Gulf Coast Associates, Realtors
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