Selecting the right mortgage lender is a critical part of the homebuying journey. With so many options, it can be challenging to figure out where to start. To help make the process smoother, we’ve gathered expert insights from Tim Scurlock, a seasoned mortgage lender and Vice President of Mortgage Lending at OriginPoint with over a decade of experience. He shared valuable tips on what to consider when choosing a lender, how to avoid common pitfalls, and the key steps to a successful mortgage process.

Start Early: When to Look for a Mortgage Lender

According to Tim, the best time to start searching for a mortgage lender is early in the homebuying process. While it’s fun to browse online listings and explore neighborhoods, getting serious about buying a home means reaching out to a lender for pre-approval. This step helps establish a realistic budget and adds confidence when making offers.

Pre-Qualification vs. Pre-Approval: What’s the Difference

Despite sounding similar, pre-qualifications and pre-approvals are different, and knowing the difference is important. Pre-qualification is a preliminary assessment based on stated income and a general check of your credit score. Pre-approval is more thorough, reviewing your income, assets, and employment history. Tim emphasizes the value of obtaining an underwritten pre-approval. Once the lender has verified all your financial documents, they provide you a stronger assurance to sellers and reducing the chances of surprises during the process.

Key Factors When Choosing a Mortgage Lender

Selecting a lender involves more than just comparing interest rates. Tim suggests prioritizing the following factors:

• Trustworthiness: Consult your real estate agent for recommendations. Real estate agents work with a variety of lenders in your local market and can point you in the right direction in regards to a lender with a reputation for closing deals efficiently.
• Communication: Choose a lender who thoroughly explains the details of your rate, closing costs, and the entire process. You want a lender who wants to take the time to help you not only get a good rate, but ensures you understand the rate. A red flag is a lender who provides only a rate sheet without a clear explanation and rushes a decision.
• Local Expertise: A local lender understands the nuances of your particular market and can advise you not only on the appraisal process and competitive factors, but experiences within specific neighborhoods. This local knowledge can be crucial for successfully closing a deal.

Loan Programs and Finding the Right One

If you have been looking at rates, no doubt the 30-year fixed-rate mortgage is an option that you have seen. However, there are various loan programs, including options for first-time homebuyers, income-based loans, and adjustable-rate mortgages (ARMs) that you can consider. Tim recommends evaluating your timeline and financial goals when choosing a loan type. For example, ARMs may be suitable for buyers who plan a shorter time between moves, while fixed-rate loans offer long-term stability.

The Benefits of Working with Local Lenders

Tim believes local lenders often have an edge over larger national institutions. “Local lenders work directly with buy-side and sell-side realtors, like the team at Malfer & Associates, which helps them understand the competitive dynamics of the local market,” he explains. Local lenders are also motivated to maintain their reputation within their communities. They work with local real estate agents, which means that they are more likely to prioritize communication and customer service.

Red Flags to Avoid When Choosing a Lender

Be cautious if a lender:

• Offers rates significantly lower than others without a clear explanation. These may indicate hidden costs like “discount points.”
• Uses appraisers unfamiliar with the local market. These can result in inconsistent property valuations and possibly cause deals to fall apart near closing.
• Is hard to reach or does not communicate well. Everyone knows that real estate happens outside of regular business hours. You need a lender who is available when needed.

Tips for First-Time Homebuyers

Tim advises first-time homebuyers to follow these steps:

• Check your credit report: Make sure there are no surprises and aim for a score above 620 to qualify for most loan programs.
• Set a budget: Calculate a comfortable monthly payment using an online mortgage calculator. You want to aim for a payment that does not exceed 35% of your gross monthly income.
• Start saving: Prepare for a down payment of at least 3% of the home’s value, along with 2% for closing costs.

The Importance of Ongoing Communication with Your Lender

Even after closing, staying in touch with your lender can be beneficial, and if you have chosen a good one, they should be the one staying in touch with you. They can help you stay informed about changes in interest rates, home values, and other factors that may affect your mortgage. A good lender remains a valuable resource and continues to offer guidance tailored to your financial situation long after closing on your home.

Final Thoughts

The right mortgage lender will guide you from the initial contact to closing and beyond. It’s not just about finding the lowest rate; it’s about choosing someone who communicates effectively, understands the local market, and builds a lasting relationship.

Partnering with a reputable real estate team like Malfer & Associates can connect you with trusted local lenders and help ensure a smoother, more confident path to homeownership. Start your homebuying journey with a team that understands your needs and a lender who can provide the personalized service you deserve.