How do I Compare Lenders?

The best way to compare lenders is to ask for a Good Faith Estimate or a closing summary.  Because of recent changes in lender rules, often they are reluctant to do a Good Faith Estimate until they've run your credit and you've found a house. 

However, you can still compare closing costs between lenders.  There are three main sections to the Good Faith Estimate or Closing Summary:  the closing costs, the interest rate & loan term, and the monthly payment.  Be sure to give all of the lenders the same estimated sales price or it could get confusing trying to figure out what's different between lenders and what's different because of the loan amount!

The closing costs are what you want to compare - particularly the lender fees.  All of the other fees on the estimate will be actual expenses.  The lenders may estimate them at slightly different rates, but ultimately you pay what the vendor charges.  The lender fees, however, are what the lender makes on the loan and these can vary wildly.  In the Bryan/College Station market, we generally see lender fees total about $600-1200 (if you're being quoted something higer, you need to shop around).  The combination of these fees are usually  the application fee, processing fee, funding fee, underwriting fee, etc.  These are the fees that you can use, in combination with the interest rate, to see which lender is the best deal. 

One last word of caution - internet lenders often show few or no lender fees.  This isn't always true and you absolutely want a Good Faith Estimate because now lenders are required by federal regulation to be within a certain percentage of the estimate - so you won't have any big surprises at closing.

As a buyer's representative, I recommend local lenders who have historically been competitive in their fees and interest rates.  I can also help buyers compare closing summaries from multiple lenders.