SterlingResidential.com | Buying & Selling Residential Properties in Texas | Houses for Rent Houston Area | Humble Atascocita Kingwood & Spring Texas Realtors | Sterling Residential®, Realtors® | Real Estate Broker: Consumers using online mortgage mills may trade service for lower interest rates

If you’re considering an online lender, be aware that online mortgage mills lower rates through volume processing — so you’re unlikely to get timely assistance if your loan runs into a problem. When a large online mortgage lender’s “quality control review” didn’t catch a loan processor’s missed employment verification until a few days before closing — something the borrower was assured was completed weeks earlier — it necessitated a last minute change in loans (with its higher rate, fees, and down payment) to get loan approval before losing the deal. Fortunately, the borrower had the additional resources necessary to make it happen.

I wrote that almost two years ago and it holds true today — especially in today’s uncertain financing environment. Borrowers shouldn’t shop only for the lowest competitive interest rate, but should consider the level of service and communication they’ll receive throughout the process. If you have special considerations, you’re better off going with a local lender you can visit in person when problems occur.

When shopping your loan, talk to several lenders, get your questions answered, compare similar loan programs, and move on if you’re not satisfied with the lender’s responsiveness. Loan shoppers shouldn’t answer spam, email promotions, faxes, or other non-solicited lender promotions. Most of these come-ons offer terms that are too good to be true. It’s easy to get caught up in the advertised rates and fees, but these are typically the best rates offered to the best qualified applicants — if they’re offered at all. Once you’ve committed to a lender, it’s very difficult to change in the middle of the deal if you don’t like the terms you’re given.

Educating yourself and shopping around is your best strategy for saving money. Studies indicate that some lenders will take advantage of consumer confusion, charging higher rates and fees to customers unfamiliar with the mortgage process — and that goes for online and local lenders and brokers. As noted in a recent HUD Press Release and the Wall Street Journal, the loan fees you are charged are often related to how much you know about the mortgage process or your education level in general.

Mortgage loans aren’t easily comparable, but you can educate yourself and save thousands over the term of your mortgage. Unlike other consumer products, prices aren’t easily comparable from lender to lender as terms, conditions, and fees alter loan pricing. It’s unfortunate, but true, that some mortgage lenders and brokers take advantage of consumers lacking basic mortgage knowledge — your best protection is to get educated or find a reliable and knowledgeable real estate broker to help you understand the mortgage lending process.