Where to start with mortgage prequalification?

[Anonymous]

I know this is a dumb question. When I bought my condo 10 years ago, I went through a first-time homebuyer program and thus did not have to search for a lender, since the program was through Bank of America.

Now I'm trying to see what I'm able to buy, and there are so many choices that I don't know where to start. A mortgage broker? My credit union? Just any random bank? Some internet-based bank? Is there a way to compare costs accurately, or is it enough just to compare the APR of the various loan offerings? Once I have a prequalification letter in hand, am I required to go with that lender, or if another lender starts offering a more attractive rate, could I switch after I have a ratified contract?

Thanks for help with the basics.

[Anonymous]

I called around several options and compared rates that they were offering--my own bank, couple of other banks, and if you have a credit union, definitely call them.

Got a prequal letter from the bank that offered us the best rate at the time; ultimately ended up buying a coop which had a limited number of lenders that they worked with, so we went with someone else.

[Anonymous]

Thanks, that's good to know -- getting a prequalification letter from one lender does not obligate me to use that lender, necessarily.

Rates are rising so quickly, now. I'm intrigued by the 5/5 ARM offered by PenFed, but I've heard their customer service leaves something to be desired.

Anyway, the person who bought my condo used Eagle Bank -- I'm assume they'd be a good one to check? And maybe an internet-based mortgage lender as well?

[Anonymous]

There really aren't any mortgage brokers anymore. Your realtor should have good referrals for you on lenders. I wouldn't use an online lender, only because I'm an agent and I always seem to have clients who start out doing that, then the loan falls through or the lender doesn't understand our market and makes us jump through a ton of extra hoops. It's aggravating and difficult in this market to be competitive when your lender is asking for things that don't pertain to DC area contracts. It always seems like a good idea because they're so "competitive" and oh yes, "we can do anything the big banks do" but I just had one hold up a settlement for an extra month because of his BS so I'm not too keen on these online people or out of the area people.

Call a few banks. I'd say your credit union, personally I know Eagle Bank to be fantastic, call First Savings Mortgage and First Financial Services. For a prequal you only need to call one just to get them to run your numbers and give you a letter. You aren't obligated to use them, but you'll submit that prequal letter with any offer you write, so if you change lenders you are obligated to tell the seller so they know what the status of your loan process is, (i.e. that you applied and that you're going with a bank they've heard of, you shouldn't switch from Bank of America to Mom and Pop Bank out of Rhode Island - looks shady to a seller.)

Hope that helps you.

[Anonymous]

There really aren't any mortgage brokers anymore.... I know Eagle Bank to be fantastic, call First Savings Mortgage and First Financial Services.

Another agent here. Eagle Bank and First Savings are fabulous. First Financial Services is NOT, in my very recent experience. And despite what PP says in his/her first sentence above, those three are indeed all mortgage brokers, which very much still exist. Otherwise fairly good advice above. PenFed and other credit unions are SLOW.

[Anonymous]

Anonymous wrote:

There really aren't any mortgage brokers anymore.... I know Eagle Bank to be fantastic, call First Savings Mortgage and First Financial Services.

Another agent here. Eagle Bank and First Savings are fabulous. First Financial Services is NOT, in my very recent experience. And despite what PP says in his/her first sentence above, those three are indeed all mortgage brokers, which very much still exist. Otherwise fairly good advice above. PenFed and other credit unions are SLOW.

I was talking mortgage broker in the sense of: call this guy and he can shop around to several banks for you. Like in 2005 when there were 100's of those people. They don't really exist anymore (though in some online formats they do.) If you call Eagle Bank, they give you a loan with Eagle Bank, not with Wells Fargo or something else. That's what I meant by brokers not really existing.

Curious - did you use First Financial out of Logan Circle? I know so many people who used them and loved them but I will say that I had a client a few years back do a transaction with them and they dropped some stuff at the last minute. But they were the best choice because of circumstances - they talk directly to their underwriters, so they could explain a credit report blip as opposed to Banks like B of A where they would say "nope" without even hearing an explanation.

[Anonymous]

I would NOT use a lender referred by your real estate agent, because they probably have a financial tie to the lenders they recommend.

Try your own bank first. Or try running numbers on a site like bankrate.com to compare from multiple places.

[Anonymous]

I was talking mortgage broker in the sense of: call this guy and he can shop around to several banks for you. Like in 2005 when there were 100's of those people. They don't really exist anymore (though in some online formats they do.) If you call Eagle Bank, they give you a loan with Eagle Bank, not with Wells Fargo or something else. That's what I meant by brokers not really existing.

OP here -- mortgage brokers don't really exist? My attorney recommended Seth Opert, who has also been recommended by others on this board, and I thought he was a broker (as in, a guy who can shop around to several lenders.)

[Anonymous]

If you're obtaining this just to find out what someone will lend you, a pre-qualification is fine, but if you want it to give you leverage when making an offer on a property, a pre-approval letter will be much more valuable, especially one customized to that property. It tells the seller that someone has said yes, they will loan you money for this property, and thus signal that your financing is less likely to fall through.

The difference is for the pre-approval they will need to actually evaluate all your financials, pull credit, etc. But then you're already halfway there for applying for the loan if you choose to go with the same lender.

However, you do NOT have to get the mortgage from the entity who pre-approved you. Once your offer is accepted you can call around and shop for rates and apply for the mortgage with whomever you choose.

So while it's recommended you talk to a few lenders, it doesn't matter all that much who pre-approves you. You can go with banks, direct lenders, or a broker.

[Anonymous]

Agent back again.

If you call Eagle Bank, they give you a loan with Eagle Bank, not with Wells Fargo or something else.

Eagle Bank has sold all of the loans of my clients to whom I've referred them, mostly to US Bank. My bad experience was with a non-local office of First Financial Services: closed two weeks late based only on their own incompetence and tardiness getting all the pertinent information to the "investor," so yes, they brokered out that loan as well, I forget to whom.

Agents can only receive compensation from their broker; anything else is a violation of a whole host of state and federal laws. I recommend lenders who have great rates and do a great job, and I don't receive anything from them in the way that PP is accusing.

[Anonymous]

Another REALTOR here. The best lenders usually come from either personal referrals or your agent despite the previous post. We are prohibited from receiving kick-backs from lenders and any affiliation must be disclosed. Find yourself a good, ethical agent and they should be able to provide you with a few lenders to talk with. Also, talk with a good friend or colleague that you trust for a referral. Here's the thing- lending guidelines have significantly changed over the years. For the most part, a pre-qual letter is worth the paper they are written on, no more as some lenders will provide them quickly without reviewing your pay stubs, tax returns, viewing W2's, financial statements. These docs are needed for an accurate and strong lender letter especially if you itemize your taxes. Good luck!

[Anonymous]

Anonymous wrote:Agent back again.

If you call Eagle Bank, they give you a loan with Eagle Bank, not with Wells Fargo or something else.

Eagle Bank has sold all of the loans of my clients to whom I've referred them, mostly to US Bank. My bad experience was with a non-local office of First Financial Services: closed two weeks late based only on their own incompetence and tardiness getting all the pertinent information to the "investor," so yes, they brokered out that loan as well, I forget to whom.

Agents can only receive compensation from their broker; anything else is a violation of a whole host of state and federal laws. I recommend lenders who have great rates and do a great job, and I don't receive anything from them in the way that PP is accusing.

Right, but your first payment is with Eagle as the mortgage company. Selling it after settlement is different than them starting out with a different bank.

[Anonymous]

Anonymous wrote:Another REALTOR here.

Omg STOP capitalizing it dude. We get it. Your arrogance drips off the screen for me.

[Anonymous]

OP here: thanks for the clarification re preapproval and prequalification. I thought prequalification was the "deeper" one but now I know I was mistaken.

[Anonymous]

I refinanced my home last year with Flagstar Bank, and had a really great experience with them. I had bought 3 homes previously, and had pretty bad experiences. If you want, I can give you the name and contact info of the Flagstar broker that handled my refinance.