Nickel over at Five Cent Nickel put up a post today about choosing a mortgage lender. A reader contacted him with the following question:
“If bank A offers me a certain APR with roughly $3,000 in closing costs, while bank B offers me a lower APR with roughly $3,000 in closing costs, but bank B is a no name bank, which do I pick? In the end, a contract is a contract, right? If I sign with ‘Joe Blow Bank’ and they loan me X dollars at the lower APR, should I go with them? Or should I remember what my mom told me? If it sounds too good to be true, then it probably is.â€
Nickel had good advice for him which included making sure you are comparing apples to apples. I have always felt that it was mostly about the numbers, although I think that one of his commenters also made a good point about being sure you can trust the person that you are dealing with. We all know there have been plenty of sleazy mortgage lenders out there which helped contribute to the real estate crisis we have going today.
When we refinanced our house earlier this year we researched rates, fees and total closing costs for each and had each person quote us with a good faith estimate. In the end it was between a neighbor, who is a mortgage broker, with a loan offer from Countrywide and our estimate from our credit union. Countrywide was just barely cheaper than our credit union but I decided to go with our credit union due to their past customer service, linkage of the loan with my online banking accounts for convenience, the local service that I have come to appreciate, and the fact that they clearly stated that they would not sell the loan to another company.
Obviously this is a personal decision. I could have opted to save a few hundred bucks and gone with Countrywide but, frankly, after all the negative press that they’ve gotten in the past couple years, I just didn’t feel like I wanted to deal with them. As Nickel points out on his post, most likely they would have sold the loan anyway.
In the end, it came down to the reputation and consistent positive experiences I’ve had with my credit union that made the decision for me. They both had the same 4.875% 30 year fixed rate terms but, like I said, Countrywide was a few hundred cheaper. It feels like money well spent from my perspective.