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How to Compare Multiple Lenders Quickly

If you’re a first time home buyer, you likely don’t have an established relationship with a mortgage lender or broker yet.  That’s fine.  But you’ll need to start such a relationship before you get too far into the home purchase process.  In fact, we recommend you find a lender first, before you try to find a house or condo or other piece of property to buy.

Finding a good lender always involves comparing multiple mortgage professionals and picking the best one.  But comparing lenders can be difficult or confusing, especially if you’re short on time.  The following outline will help you.

1.  Identify mortgage lenders in your area.  You can’t compare lenders or brokers if you don’t know who they are.  To get started, utilize on internet resource such as this site to find lenders and brokers in your area who may be able to help you close your loan.  This step won’t take long.  Make a list of each and every mortgage professional who you think might fit your needs.   If you’re looking for an FHA mortgage specifically, don’t include lenders on this list who only offer conventional loans.  Try to develop a broad but manageable list.  Find at least five lenders.

2.  Ask these lenders for rate quotes.  One of the most important aspects of your future mortgage is the interest rate you receive.  Your first order of business is to compare mortgage rates offered by each of these lenders.  Ask all five of the lenders on your list for accurate rate quotes.  Make sure you give the lenders some information about yourself and your financial situation.  If they don’t ask for this, they probably aren’t giving you an accurate quote.  Steer clear of lenders who may try to suck you in with inaccurate rate quotes.

3.  Ask your top three lenders for GFEs.  Once you’ve reviewed the rate quotes provided by the lenders on your list, identify the top three potential candidates and contact them again.  This time, ask each lender to send you a good faith estimate (GFE).  This document outlines all of the costs associated with the loan.  All lenders are required by law to furnish such documentation on request.

The GFE is a standardized document.  Once you receive the GFEs from your top three lenders, lay them out side by side and compare them.  Pay close attention to closing costs, which can differ widely from lender to lender.  Many origination charges are negotiable.  If you see a lender who charges high origination fees but offers good rates and terms everywhere else, you may be able to negotiate a better arrangement.

4.  Find reviews and testimonials on each lender.  This part can be a bit tricky, but it shouldn’t take more than an afternoon and some time on the internet.  Research each lender with the Better Business Bureau and other rating sites, such as this one.  Try to determine whether the lenders you’re comparing were easy to work with, good with communication, and fast and accurate when dealing with previous clients.

5.  Contact the lenders and start negotiating.  Make sure you let each lender know that you’re comparing multiple lenders.  Try to get as many fees reduced as possible, but negotiate rates, too.  Many lenders are willing to alter rates slightly in exchange for concessions elsewhere.

After negotiating, the rest is easy.  Simply pick the lender or broker who offers the best terms.  Other than waiting for the lenders to provide you with rate quotes and GFEs, this entire process shouldn’t take you more than two days.  Good luck.

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