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How to Choose a Mortgage Lender

Most states require real estate agents be licensed by state regulatory bodies. The agents have a fiduciary duty to protect the interest of the consumer. This is not the case with mortgage lenders. Licensing requirements for mortgage lenders vary greatly by state. In fact, less than one-third of our states have licensing requirements for loan officers. There are laws and regulations designed to protect consumers from false advertising, discrimination, and fraudulent conduct. There are no regulations that require lenders to look after a consumer's fiduciary interest. How, then, is a buyer to choose a mortgage lender?

The key element in choosing the appropriate lender is homework. Unless the lenders you are considering are in a state that requires licensing for lenders, a lender has no incentive whatsoever to ensure that a consumer receives the best available loan. A consumer must watch after his or her own interest. Comparison shop, know the rates in the local and national market, interview a lender, question, question, and question again. Do not hesitate to move on to another lender if you are intuitively uncomfortable with a lender you are considering. Have patience. You will find the right mortgage lender to fulfill your specific needs.

Another good option to choosing a mortgage lender is to ask your real estate agent. You have already built a relationship with your real estate representative. Real estate agents have a strong working knowledge of trustworthy lenders and there are no monetary incentives from mortgage lenders for referrals.

Karyn Schonherz is a trusted Realtor® with over 32 years of experience.
Visit Karyn4RealEstate.com or
Call 714.283.6653

There are a variety of lending institutions to consider for your mortgage loan:

• Mortgage Brokers
• Mortgage Bankers
• Savings & Loan Associations
• Commercial Banks
• Credit Unions
• Online Lenders
• Stock Brokerages
• Private Individuals

Given the fact that the real estate market is currently at a record high for foreclosures, many subprime mortgage lenders have closed their doors. It is harder to qualify for a mortgage loan and it is harder to refinance. If you fall within the subprime market due to a low credit score or if you are an uneducated consumer, you need to be wary of lenders who prey on such consumers. You may be the victim of a predatory lender if:

• The lender tells you that your credit history does not matter but the rates and fees are extremely high.
• The representative encourages you to falsify your loan application.
• The representative pressures you to accept a higher monthly payment than you know you can afford.
• The lender claims that no one else will give you a loan.
• Your intuition is screaming that something is not right about the deal.
• The lender markets its services by telemarketing, direct mail, and flyers.

Predatory lenders are unethical and do not operate within the scope of the law. If you are approached by a predatory lender, contact the Federal Trade Commission or your state's attorney general.

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