Ways to vet out a lender?

Question

I am looking to get into my first deal and I have looked at 3 different lenders. 2 of them gave me a very similar rate and I know people that have used them for deals in the past. The 3rd lender is a "wholesale mortgage broker" and has given me a rate that is about .8%-1% better than the other 2 lenders.

So my question is this. Besides asking to speak with references, what some other ways to vet out a lender? When speaking with references, what questions should I ask? Are there any red flags I should look out for?

Chris Mason · Answer

About 90% of lenders will be within 0.25% of each other for 90% of scenarios. The "market mechanism" and whatnot. You'd go bankrupt if you were significantly below that, and wouldn't have any business if above.

.8% to 1% to rate sounds suspiciously like the typical rate hit for investment property v owner occ, or SFR v 2-4 unit. Someone probably forgot to check one of those boxes, humans are humans. If he insists that is real, I might give him a shot at a refi where reliability isn't a huge issue. I wouldn't want you to lose a property over something as simple as that, but on a refi there's minimal risk... just an appraisal fee.

I don't begrudge my clients that go with a rando promising the world on a refi. Half the time it works out fine (& good for them), half the time they call me back 6 weeks later pissed off and frustrated at the person who promised the world but backed out at the last minute (good thing it was just a refi and there was no earnest money or property on the line), and 100% of the time they hit me up when it's a purchase mortgage.