When a mortgage lender is recommended.

If your Realtor or builder makes a suggestion for a mortgage
lender, be sure to talk to that lender. There are several
reasons why they make recommendations.

One reason Realtors and builders make suggestions is
because they want to recommend someone reliable.
Reliability is important to you, so that you don't end up with a
horror story to tell. Reliability is also important to the seller,
the agents, and everyone involved in your transaction
because if the deal doesn't close, everyone walks away with
nothing.

When agents and builders recommend mortgage lenders,
they often develop a certain amount of "clout" in dealing with
those lenders. This can help in a situation where you need to
cut through "red tape" and get something done quickly.

When buying a new home, dealing with a recommended
lender is often very important. This is because there are a lot
of intricacies involved in new homes that do not exist when
buying resale. If you "shop" around to find your own mortgage
lender, you may end up with someone who quotes a great
rate and is great with refinances or resales, but has no
experience with new homes. This can lead to problems or
delays.

Over the last ten years, real estate companies and builders
have built up their own mortgage brokerages. "Bundled
services" like this make sense because it adds another profit
center to the company. This is useful because it helps real
estate companies to offset higher commission splits with
their agents.

In the early days of "bundled services," the loan officers and
staff were often sub-par and the quality of service may not
have been so great. Things have improved since then.
However, because this is "captured business," sometimes
these lenders don't have as much incentive to offer you great
deals or lower rates. All you have to do is let them know you
are "shopping rates" and they will probably work toward
accommodating you as much as possible.

Never automatically disqualify a recommended lender, but
be sure to be ask questions about any relationships
between the lending company and your builder or real estate
agent's company. That will help you be more vigilant on
getting the best interest rate and the lowest costs.

CONCLUSION

Make sure to do a little shopping for yourself. By knowing the
interest rates of the market and making sure your loan officer
knows you are looking at rates from other institutions, you
can use that as leverage to make sure you are obtaining the
best combination of service and lowest rates.