How to Choose a Mortgage Banker

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When I first started the process of buying an apartment in New York City, I thought I'd just choose the bank that offered me the lowest interest rate. But I soon realized that many other aspects were just as important as the rate on the loan -- if not more so.

Customer Service. Getting a mortgage isn't exactly the most exciting activity. It can be a long, drawn-out process, so it's important to have a mortgage banker willing and available to answer your questions, including what to expect from the process, and what factors affect interest rates, and ultimately, your money.

When I was shopping for a mortgage, I spoke with four banks. At first, two banks stood out for exceptional service. However, over the two- to three-month process, one bank really differentiated itself. We liked the banker's responsiveness on nights, weekends and even holidays. Other bankers weren't nearly as responsive, even during regular business hours, and some wouldn't respond to our emails for weeks. Our banker was also very thorough and thoughtful with his email responses. Overall, he made us feel like he valued our business and wanted to do everything in his power to make the not-so-fun process bearable.

Closing costs. Not every bank has the same standard closing costs for origination, attorney, appraisal and credit check fees. When you request an interest rate quote, also ask for a line-by-line estimate of all of the associated closing costs.

Rebates on closing costs. We didn't even know rebates were possible until one bank mentioned them as part of its quote. We ended up using that quote to shop around to other banks, saving us more than $1,000.

Borrower benefits. These are the equivalent of promo codes and coupons in the regular shopping world. Some banks offer an interest rate reduction if you sign up for a checking account and have mortgage payments automatically deducted from that account. This direct debit could shave 0.25 percentage points or more off of your interest rate -- much more than a regular store coupon.

Trust. You want someone you can trust.

Flexibility. You want someone who will be flexible -- not cheap -- with your situation. For our loan, we initially locked in an interest rate for 60 days, but then we needed an additional 30 days to close on our apartment. Typically, a 30-day extension would require an additional payment or an increase in the interest rate, but our bank extended our rate lock for free -- amounting to several thousands of dollars of savings to us.

In the end, we were able to use the bank that provided us with both the best service and the best rate.

Do you have any other tips relating to how you picked a mortgage banker? If so, tell us in the comments section below.

Roger Ma is the founder of lifelaidout, a personal finance blog that helps others identify value and save time, money, and energy in their everyday lives.

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The brute fact of the matter is that any incentive or option offered by one source will be matched by another based on decent credit, the length of the loan and the Loan-to-Price ratio. We recently refinanced and went to two providers, one our previous mortgage holder, figuring the loan was theirs to lose, and the other a re-seller via one of the many on-line sources. We were willing to pay the $200 fee to each one, and wound up with a full percentage point reduction in rate, no fees, and a forgiveness of the appraisal and recording fees. So, now we are at 2.25% APR on a 15 year loan. But, our loan-to-value ratio is about 28% - that is, we owe about 28% of the value of the house. That and good credit had the banks competing for our business. Interestingly enough, the re-seller sold the loan to our original bank - go figure.

April 14 2014 at 10:01 AM Report abuse rate up rate down Reply