If you’ve started shopping for your first home, you’re also going to want to start shopping around for the best mortgage while you’re at it.

That way, you’ll know exactly how much house you can afford, for one thing.

But, how do you find the right mortgage?

Especially since there’s a never ending and confusing sea of ads for them online – all trying to get your attention and your money.

First, let me debunk a myth that’s out there among homebuyers.  

It’s the false assumption that you should be shopping for the best rate, instead of shopping for the best mortgage lender and company.

(Just a note here:  When I say lender throughout this article, I’m referring to the person who will be helping you with the loan.  Other titles that essentially mean the same are: loan officer, loan originator, mortgage banker, and mortgage consultant.   For our purposes in this article, the word lender will work just fine.  It’s the same for mortgage companies.  To keep things simple, I’m using the term ‘mortgage companies’ to refer to all the different types - including the big companies, small ones, banks, etc.   We’ll explore all of them in another article.) 

But, searching only for the best rate and not the best mortgage company could be a huge mistake.  And it could actually cost you thousands in the long run.   

That’s because an excellent rate does not necessarily mean it’s coming from an excellent and trustworthy lender.

Many mortgage companies are known to bait potential customers with crazy low interest rates.  Only to pad the loan with bogus fees and charges that in the end will cost you more than if you went with a higher rate, but a better company.  

They’ll make these costs look official to unsuspecting homebuyers.  But, they’re just the company’s way of getting you to unknowingly fork over your money to them.

So, how do you find a good lender with a great rate then?

That’s what you’ll find out in this article.  You’ll learn how to search for good lenders.

And you’ll get tips on how to spot the bad ones. 

6 Ways to Find the Best Mortgage Company

1.  Talk to Friends and Family

This is hands down the number one way to find a good mortgage company.

Ask friends and family who have bought homes in the fairly recent past. 

You might even go a level or two removed.  Meaning if friends or family don’t have any fairly recent experiences with lenders, ask them to give you names of their friends and family who have. 

Then, see if you can sit down with that person or couple – or talk with them on the phone.  

If they are comfortable doing so, have them tell you everything about their experience with a particular lender, the mortgage company, and the mortgage itself.  

They might have even gone through a few before finding the right one.

They’ll most likely have a good story to tell and plenty of information to share with you.  

If their experience with a particular lender and mortgage company or bank was excellent, that’s great for you.  

You can then check into that lender by calling them on the phone or meeting in person; checking out their website, social media channels, reviews online, rates, fees, etc. etc.

In an upcoming article, I’ll tell you all about the mortgage application process.

If their experience obtaining the mortgage and dealing with the lender was not a good one, that’s still good info.  That’s one company you can scratch off your list.

And as always, take everyone’s stories with a grain of salt.  Are they difficult people themselves?  This could mean the lender might not be so bad.  Try and read between the lines, if you have to.

2.  Ask Your Real Estate Agent

If you don’t have a real estate agent yet to help you find a home, here’s a great article to help.

Your real estate agent will have a list of lenders he or she can recommend to you.  They’ll most likely be able to recommend a lender who’s experienced with first-time homebuyers.

Once you have a few names, it’s time to do some digging.

Just like I mentioned above, you’re always going to want to research a lender and the company they represent.  

Check each of them out online.  Look at their reviews.  See if there’s any regulatory actions against them that show up.

In #6 below, I talk about how to find the right reviews online.  Not all reviews are the same.  Some so-called reviews are just marketing meant to make the company look good.

If a lender’s office is close by, go there and talk with them to get a good feel for their personality.  If they’re not close by, call them and talk on the phone. 

Remember, a meeting or phone call does not mean you are committing to them.  In fact, call a bunch of lenders on the phone, so that you can weed out the ones that don’t sound like a good fit for you.

You are interviewing them – not the other way around.  Keep this in mind.  Especially being a first-time homebuyer, where you might be feeling naïve about the whole process.

You also might not have the best credit history and feel as though you’d be lucky to have any lender at all want to work with you.  If this is you, you’re going to want to change this mindset.

You’re actually in the driver’s seat. 

Yes, your options could be slim if your credit is not so good. 

But, that doesn’t mean you have to settle for a lender you don’t feel right about.

Even if your credit is too low right now and you have to wait to get a mortgage until you clean up some issues and raise your score.  . .

You still want to work with someone who has integrity.

3.  Ask Other People You Know

Who do you know who might have connections with lenders?

Is your boss a member of the local chamber of commerce?

Do you stop at a local coffee shop every morning where plenty of people stop by and make small talk?

There might be many people you come in contact with on a daily or weekly basis who might be able to give you names of lenders they know.

Here’s another tip for when you do get a lender and mortgage company’s name.

You can research online whether any complaints have been filed against the company.  Here are three places you can check:

• Your state’s attorney general’s office
• The Better Business Bureau
• The Mortgage Bankers Association 

True story about a mortgage company and the Better Business Bureau:

The company had been running ads on the radio claiming they were chosen by the Better Business Bureau as the company of the year.  

Did that mean they had the best rating with the BBB?

Not quite.  The honor they gave themselves was supposedly due to donating the most money to the BBB that year and volunteering the most at charity events.

Deceptive?  I think so.

4. Check Your State’s Housing Authority Website

Each state has programs for first-time homebuyers and for residents who might qualify for certain loans other than the basic conventional loans.

I’ll be writing an article soon about all the types of loans available.

State websites include a list of the state’s approved lenders who offer these types of loans.

It’s definitely worth checking out your state’s housing website.  

Spend some time while you’re on it, since these websites are always filled with excellent information and resources for homebuyers.

5.  Check With Your Own Bank or Credit Union

A good lender might be right under your nose at your local bank.

And let’s face it – local banks definitely have a more trustworthy feel to them compared to the huge faceless online mortgage companies.

You might have even been going to the same bank for years and have gotten to know some of the tellers and other people who work there.

But, be sure to compare their rates and fees with other lenders. 

They’re in business to make money too.

And you’re not obligated to use them for your mortgage, just because you’re there every week for your checking account.

6. Research Mortgage Companies Online

We are a world online these days.  So, you most likely have already been plowing through a bunch of websites that list and compare mortgage companies and their rates.

And I’m guessing you’re no doubt being ‘followed’ now online – with these mortgage company ads popping up everywhere.

Two words here:  Be cautious!

There’s a lot of companies out there that want to ‘bait’ you with incredibly low mortgage rates.  

Only to make up for it with hidden, confusing fees and charges you’ll end up paying at closing and throughout the life of the mortgage.

Even websites that look like they’re looking out for you might not be!

Here’s a perfect example:  consumersadvocate.org

Don’t they just sound like they are fighting for your best interests?  After all, the name says it all, right?  Consumers Advocate. 

And they have a .org extension besides.  That’s usually used by non-profit companies.  Those scrappy companies who work hard for good causes.  

No and no. 

This is just a company appearing to be some kind of freedom fighting organization standing up and protecting the little guy from the big companies.

That’s just its name.  

They are a lead generation website getting paid by all the companies they list.

Right on their homepage, there’s a disclaimer that says:  

“Many or all of the companies featured here provide compensation to us. “

And don’t think they included that to be transparent.  They did because they had no choice – it’s the law to disclose this information.

Then when you click on the ‘learn more’ link at the top, you see that they not only get paid by all of the lending companies they’re supposedly researching for you – but the more a company pays them, the higher up on the list it gets placed.

It says:

“We sometimes offer premium or additional placements on our website and in our marketing materials to our advertising partners. Partners may influence their position on our website, including the order in which they appear on the page.“

Don’t be fooled by names!

Or by all the positive reviews on the sites, the made up scoring, the wording and description of how great this mortgage company is.  All paid for.

Keep this in mind when you click on any of these websites.  it’s the exact same thing for all of them.  Compensation for placement.

So, how do you find a trustworthy lender online when everyone’s getting paid off?

Once you find a few mortgage companies or banks on these sites, open up a new tab on your computer or phone and Google reviews for that company.

But, don’t pick the first bunch of websites that pop up.  

Because the whole lot of them are all the companies that are being paid by that lender to put its own reviews and ratings on.  

Keep scrolling way down. 

And keep clicking on websites until you find some that look like they are not getting paid by the lenders – either through lead generation or ads on the site.

I found this website sitejabber.com that seemed to be legit.  I say that because there are plenty of bad reviews for the company AmeriSave that I didn’t see on the other websites.

You can click on the link above to see the reviews.

So, you might find the right mortgage company online.  But, you have to do your due diligence and research it as much as you can.

It’s not the same as being able to walk into a bank or local mortgage company and speak with a loan officer face to face. 

But, you can talk with a lender from the mortgage company on the phone to get a feel for them.

When you’re talking with them, besides getting your questions answered, ask yourself:

• Do they sound honest?
• Do they sound rehearsed and salesy?
• Are they in a rush to get you to hand your information to them?
• Are they answering all of your questions thoroughly?
• Are you understanding the process better and their company better after talking with them?

Here are Questions You Can Ask Them to Help You Decide:

• What are your current rates? 

• What are all of your fees and charges –  including application fees, underwriting fees, closing fees, etc.? 

Keep in mind that they don’t have to be totally up front on the phone with you about these.  By law, though, they have to provide you with a Loan Estimate within three days that lists all of this information.  I’ll talk more about this in an upcoming article.

• What are the current points you’re offering?  These are fees that allow you to get a lower interest rate.

• Will I be working with you directly through this process or with other people there?

• What is your main method of communication and how quickly do you respond?  Phone calls?  Emails only?

• How long will the current rate be locked in?

• Do you have a down payment assistance program?

• What types of loans do you offer?

• Etc.

Getting these questions answered, along with doing your own research like I talked about above, will give you the data you need to make a good decision.

Ideally, you’ll want to compare three lenders this way before deciding on one.

Good luck!

Stay tuned for more like it on all the ins and outs of homebuying for first-time homebuyers.

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If you’d like to ask me any questions, email me anytime at:  paula@michaelandsullivan.com.