What to expect when talking to a lender or mortgage broker

Question

I am one of the many who are looking to get a househack going in Dallas when I move there in May, and a natural part of that is lenders. An agent has (very helpfully) sent me a list of lenders/brokers (are those the same thing?) that I can call to talk to regarding a mortgage. My concern is that I have no idea what to expect. What kind of information should I have prepared? What will they ask, what should I ask? I've read that you should compare the offerings of each and go from there, but I'm unsure of how to get there. I hope to use an FHA loan on this property, so I assume I'd need to find out if they even offer that and what interest rates I'd be working with. Do I just call or email them outlining my situation and go from there? I am clearly just getting started and I don't want to come across as ignorant or waste their time explaining things I should already know. Any advice is appreciated!

Eudith Vacio · Answer

@Haley Powell I would suggest going with a broker as @Yonah Weiss mentioned they offer a broad range of products rather than a mortgage lender that is tied to their banks products. I would run through 2-3 different lenders, and suggest applying to all within a 2 week timeframe as they will run a hard inquiry on your credit to apply for the loan. If you apply within a 2-3 week timeframe it only counts as 1 hit towards your credit score. Best of luck!

Sean Majewski · Answer

Any good lender will walk you thru the process and answer your questions so you have a good understanding of the process. Work with one you feel comfortable with, who's available/responsive to your inquiries, and local to you - so you can talk to them face to face [whether you do or not is up to you, but if needed, I like to have the option as they're typically better at getting your property to close - in my real estate agent experience]. A few tips:

- Make sure when you're comparing quotes that the loan type, rate, down payment, estimated property taxes + insurance, etc are the same. Then you can see any differences in fees the lender is charging, and clarify what they're for.

- The lender will need several documents from you to flesh out your loan options - Start a folder with all of the required documents you'll need to apply [pay stubs, bank statements, tax returns/W2s etc, so you have them in one place if you apply with more than one lender]

It seems like at the moment, conventional loan products are competitive with FHA ones and avoid some possible hang ups of FHA loans, if you can go that route. A good lender should be able to give you some different options and determine what's best for your situation.

Haley Powell · Answer

Thank you for your advice Yonah, it is very helpful! I had become so focused on finding a property that suited my situation that I had completely neglected researching financing options.

Yonah Weiss · Answer

@Haley Powell good luck on your upcoming transition.

First of all there are hundreds of lenders and loan products out there, and not every lender offers everything (for example FHA loans like you are interested in) Whereas, a mortgage broker will work with many lenders, and many products, and a good one will be able to find you the best rates and terms that are available. Brokers usually charge an origination fee (typically 1% of the loan amount).

I would call or email a few of them, and as you say, outline your situation, and see who can, not only offer you the best terms, but also educate you, and walk you through the process of buying your first property.

Haley Powell · Answer

Thank you Eudith! I hadn't thought about the impact of the credit check, thank you for telling me!

Haley Powell · Answer

I think the main hangup for me is that I haven't started the job yet, I graduate in May and begin in June, so I may need to wait until I have a couple pay stubs in hand. Thank you for your comment!

Haley Powell · Answer

Thank you for the tips Sean! I will keep those in mind going forward. I probably need to do more research on loans beyond the FHA loan.

Theresa Harris · Answer

They are going to want to know your income, debts and expenses to get a better idea of how much you can afford.  They will also want to know how much you have for a down payment.

What to expect when talking to a lender or mortgage broker

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