Part of the home buying process is finding a lender. Mortgage lending companies designate a loan consultant or loan officer to deal with a certain borrower. However, state laws differ in each American states and less than a third requires that all loan officers dealing with clients be licensed.

Dealing with Loan Officers

Most borrowers have not choice but to deal with loan officers who may not have sufficient training in mortgaging. A loan officer may also have just little experience or even totally no experience at all. Furthermore, a borrower does not have any guarantee that the loan officer has been cleared from any criminal background.

In addition, loan officers earn through commission. This means, the larger the loan, the larger the percentage of the commission would be. Aside from the loan price, the higher the points that the borrower pays, these charged points add up to the loan officer’s earnings. Naturally, you can’t expect a loan officer to get you a lower loan rate with barely anything left to pocket.

No Guarantees

Obviously, mortgage lending companies do not look after a borrower’s best interest. They’re only after maintaining or getting the edge over their competition. Despite Federal Laws that aim to protect consumers such as the Truth-in-Lending Act, the Fair Housing Act and the Real Estate Settlement Procedures Act, consumers are not guaranteed completely protected from predatory lenders and possible fraud.

For this reason, borrowers must be aware on how to protect themselves from unfair practices or fraudulent activities. There are a lot of lending companies out there and it would not be an easy task to choose the right one without taking time. It is a must for every borrower to compare each company from the other. Try to pick at least three prospective companies and get as much information as you can about them.

How to find a Good Lender

Don’t hesitate to ask a lot of questions about their lending requirements and procedures. Be sure that you do understand the explanations given to you. Request quotes and don’t just focus on the interest rate being offered. Instead, compare the APR or the Annual Percentage Rate of the loan.

The APR is a calculation of the interest rate, along with other fees associated with your mortgage. These other fees include origination fees, processing fees, title fees and others. Although not all fees are calculated in the APR, this gives you a more accurate idea on how much would you will really be paying to that particular lending company.

If a lending company refuses to entertain your questions, this is a clear sign that you should take your business somewhere else. Don’t sign up for a lender who offers a low interest loan but refuses to give you an estimate of all other costs you need to submit. Most lenders try to bait customers by offering small interest rate only to charge them with higher “processing fees”, “administrative fees”, etc. Be a wise borrower and study your lender carefully before getting accepting any transaction.

About the Author

Liz Roberts is a freelance writer and loan consultant. The website http://www.badcreditresources.com offers resources that specialize in providing bad credit loans and bad credit cards to people with bad credit.

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