Reviewing the Facts: 3 Reasons You Should Check More than one Lender Before Signing

July 6, 2018 at 12:46 AM Leave a comment

Getting a loan is a big financial decision, the one likely to dictate the way you’re going to live for the next couple of years. Therefore, not jumping on the first opportunity that knocks on your door goes a long way towards making a smart choice you won’t end up regretting anytime soon. By doing your due diligence prior to entering a contractual relationship with a lender, you’ll lessen your chances of running into problems later on. In fact, you should be on the lookout for as many offers as possible, and there are 3 major reasons why you should do this:

1. Get some much-needed cost transparency

By going over what each lender out there can offer you in terms of costs, your decision will become much easier. If you are able to calculate your costs in advance, there won’t be any unpleasant surprises. However, you should also take the time needed to inquire about others fees you may encounter in the process.

For starters, you need to ask about the interest rates. It’s also important to verify that the rates quoted are the lowest for that day. Sometimes, interest rates can be adjustable, and you need to make sure the lender isn’t going to impose mind-numbing interest rate heights at a later date. Also, make sure to be in the know whether your loan payments will be adjusted in accordance with the fluctuating interest rates.

Then, it’s a good idea to make sure there are no other hidden fees that you’re going to encounter. This means there should ideally be no broker fees, no closing costs, and no underwriting fees. And in case there are, a reputable lender will be more than happy to be transparent about them, or at least give you a rough estimate of what you can expect to see. Application fees, for instance, are the first thing you’re going to encounter, and they may very well set the tone for the rest of the interaction with a lender you’re considering to be working with. If you can’t afford to pay these immediately, there’s an option of borrowing money to be able to cover them, but this will increase your starting costs.

Finally, keep in mind that although it’s possible to find a so called “no cost” loan, generally speaking, they tend to have a higher rates attached to them. Whenever you’re in doubt about something, do not hesitate to ask some questions. Sometimes, more than one type of fee will be meshed together in a single number, so – again – don’t be afraid to ask for additional explanation when needed.

2. Snag the best possible deal by researching multiple lenders at once and checking what others have to say

Thanks to the internet becoming so mainstream, gathering data on any particular service provider is now easier than ever before. All you have to do is type their name into a search engine of your choice, and off you go. If you’re going to follow this strategy, it’s best to make a spreadsheet and place any information you stumble across inside, which should allow for a side by side comparison at a later point.

Another very time-efficient way to gather all the info you need is to check out various lender review websites like https://loanreviewhq.com/. By doing so, you accomplish multiple things at once. First of all, you might discover a lender you haven’t even heard of before, and secondly, you won’t have to gather all the reviews and testimonials all over the internet, since it’s going to be neatly laid in front of you in a single spot.

One of the most important things to keep in mind is that by visiting a lender’s website, kind in mind the client testimonials you’re going to find there are moderated and hand-picked by the website’s administrator. In other words, in most cases, they only decide to display the ones that are to their liking, which means you’re not going to get an accurate idea about the quality of their services merely by looking at their website. Make no mistake; this is a great way to gather valuable information such as fees, cost comparison tables, estimates, selection criteria, etc. But when it comes to reviews and client testimonials, it’s best to stick to a third party source that can be trusted.

Lender review websites, as we’ve already mentioned, are one such example. Then, you should also check to see what the users on various social media channels have to say. Facebook is great for exactly this purpose, since it allows you to check exactly who said what, then examine that person’s claims by visiting their profile page and verifying it’s coming from a legitimate person. If it looks unbiased, it probably is.

Facebook groups are another great hidden resource that you can use to get great recommendations, but for whatever reason, people never think of them when they’re in the research phase. Sometimes, by asking around, people will be able to recommend you a lender you haven’t even considered or heard about up until that point.

Basically, whatever independent third party source you can find to study client reviews and testimonials is fine, as long as you can be sure that the data presented is legitimate and cannot be falsified or shown selectively.

3. See how the lenders you’re considering respond to negotiation

Here’s another secret to getting a good deal; by being a good negotiator, you can drive the prices down a bit. However, some lenders are going to be more receptive to your negotiation tactics than others, so it’s important to initiate contact with more than just a single one.

In order to do this step efficiently, you should have already completed your researched and filtered them down to just a couple of top contenders whose terms seem reasonable to you.

Did you know it’s possible for the same lender to offer different terms and rates to different customers, even though all the other variables are the same and these customers have the same qualifications? The reason being is that in certain cases, these brokers and officials are allowed to keep the difference as extra compensation.

Don’t think these differences only apply to fixed rate loans; they can also affect the variable rate loans. These can be in the form of fees, interest rates, points…

Therefore, by having this knowledge at your disposal, always try your best to negotiate a better deal. Have them write them down the updated terms, costs, fees, interest rates, etc. While negotiating, be careful that all of the fees are lowered; sometimes, in an attempt to make an offer more enticing, lenders will try to lower one variable while raising the other.

Even if you’re not finding any success with a particular lender, try another, and come back with updated results.

A great negotiation tactic you can use is to quote prices you’ve been able to find elsewhere (either on the internet or by visiting a particular lender). Then, by presenting these lower prices directly, you’ll have a much easier job negotiating a lower fee.

When you’ve agreed on the fees and terms you find suitable, it’s important to lock them in written form keep the agreement above the verbal level. The paper should contain the new terms, fees, costs, and everything relevant to the contract you’re about to sign. Of course, if the lender feels like an expiration date is in order after which the lowered fees are reverted back to normal (this takes effect in the event that you don’t sign until then), this is entirely respectable. In fact, some may even go beyond that and decide to charge you a fee for locking in the newly agreed-upon rates. On the bright side, many lenders will be willing to refund it back to you once the deal is inked.

Even though locking in the rates is negotiated to act in your favor, sometimes, the opposite can happen if the general rates get lowered just before you’ve decided to sign the contract. If the lender you’re about to sign a contract with is reasonable, you’ll be offered some form of compensation, should it ever come to this. It’s not a given that they will agree with you, but generally speaking, it’s in their interest to keep the relationships with their existing and potential clients in good standing, so chances are they’re going to cave in eventually.

Finally, keep in mind the lenders are obligated to play fair to remain compliant with the demands of the law. In other words, you should not be discriminated against based on your skin color, age, religion, handicap, etc. This means that the lender may never demand more money from you just because you are not to their liking for whatever (subjective) reason.

Conclusion

This should be more than enough information so you can begin your search. Now try to compare everything we’ve said with focusing on a single lender exclusively. As you can see, trying to get a better deal is much easier when you’re spinning multiple plates. When everything is laid out on the table, you can then simply proceed to pick the best offer you’ve been presented with.

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