FAQs on mortgages- How to find the unicorn lender

If you didn’t read Part 1 of this series:

What defines a unicorn mortgage lender & how to find them:

1. Ask for referrals. Your Realtor should be helping you with this and they should explain why they are referring them. Ideally they give you 2 names that they are not related to, have no financial stake in. Kickbacks are prohibited by law, but your Realtor can be related to a LO, married to them, or also are a lender

2. They offer competitive rates. No they may not offer the lowest rate you can find online, but I always say beware the teaser rate that requires you to meet a very specific set of criteria that turns out you don’t qualify for. If you find super low rates but the lender cannot close your escrow in the time Sellers want, or at all, then its not such a great rate. If you find someone you want to work with, you can always go back to them to see if they can get closer.

3. They perform. If they tell you they can close a loan in 15 days (everything but jumbo) then they should be able to prove it. Ask them for addresses, references, other Realtors that will speak to their performance. Call them! Look up the closed properties, Pending vs Close date.

4. They solve problems quickly. Problems occur and sometimes this causes a loan to close late, but usually they are resolved in a matter of days, not weeks. This is not to say sometimes the investor just won’t fund your loan when you’re late in the game, but this is one reason to use a mortgage broker or a direct lender who can switch investors

1. Unless you have a preferred banking relationship with a lot of assets, retail banks generally won’t offer the best mortgage rates. Sometimes they will offer great jumbo rates. The next question is how fast can you close? What happens if you don’t close on time? Will you pay a daily per diem penalty to the Seller so I can extend escrow?

2. Go with direct lenders & brokers. Avoid retail depository bank especially if self employed (SE). Retail banks are often more conservative and don’t handle problems well nor quickly. They can do what’s known as “stipping” a loan to death. Stipulation after stip- but they won’t tell you flat out they don’t & won’t close this loan. Wholesale lenders are used to processing volume

3. They have a direct phone number, answer the phone & emails on weekends or after business hours as needed. We’re writing offers or responding to counters often after 5pm or on weekends. They will call LA to talk you up as a Buyer and will not be offended with the LA vets them, asks tough questions

4. If you fill out a mortgage application, provide your complete financial package and the lender cannot get back to you within 24-48 hours with some form of response then this a red flag. They may need more time to review your documents especially if you’re self employed but generally most LOs I work with can review and generate a lender pre-approval within a couple of days. Some LOs will offer the option to fully underwrite you as a Buyer

5. They do not charge you exorbitant origination fees that have nothing to do with paying points or buying down the rate. It is standard to charge an underwriting fee, appraisal & credit. On FHA & VA, the upfront funding fee is set by FHA & VA and should not be marked up

Any lender should be able to do a VA loan, the lenders that market themselves as veteran experts are sometimes the slowest and not the most competitive on rates

More on Mortgages & Why Your Team Matters:

Why Your Lender & Realtor Matters on Offers