So, how do you determine which lender is best for your situation? Regardless of whether your credit is good or has a few blemishes, there are several key points to consider when choosing your lender:
Out-of-state lenders. Unless your lender is intimately familiar with your state, you may get unwelcome "surprises" regarding appraisal value, title fees, and closing costs.
Customer support. Avoid lenders who have limited contact hours and do not offer live customer support. During the appraisal and/or home inspection process, you'll want to be able to speak to your loan officer if problems arise.
BBB Standing. Every year, the mortgage and lending industry receives a tremendous number of complaints. Before choosing a lender, check for BBB grievances by visiting http://search.bbb.org/search.html
Maximum fee guarantee. While a Good Faith Estimate is an estimate of the charges and fees associated with the loan, there's no rule stating that lenders are legally bound to the fees outlined in the document. Because it is 100% legal for lenders to add or change fees, it's always best to choose one that offers a "Maximum Fee Guarantee" to avoid hidden fees or "surprises" at closing.
Low-balling closing cost estimates. Per diem interest, tax escrows, and title insurance fees are state mandated, and it is illegal for a lending institution to offer discounts or cut-rates for those fees. Research the state-specific fees associated with your loan, and compare this information to the estimates you're receiving from lenders. If lenders are low-balling these cost estimates, your Good Faith Estimate is worthless.
Evaluating the financial fitness of second mortgage lenders is just one facet in the decision-making process. After choosing a pool of reputable lenders, you'll also have to compare interest rates, fees, potential penalties, and specific lending terms. You'll have a long-term financial relationship with your second mortgage lender of 10, 15 years - or even longer - so be sure to take the time to choose the lender that is right for you.