Connecticut Real Estate Blog - Real Real Estate in CT

1. Mortgage Lenders/Brokers Don’t Owe Any Fiduciary Responsibilities to Borrowers

A fiduciary is one who acts legally on behalf and in the best interests of another. Realtors are required ethically and legally to act as fiduciaries for their clients.  Examples of Realtor fiduciary responsibilities are: Disclosure; Reasonable Care; Loyalty and Obedience, just to name a few of them.  Unlike Realtors, mortgage lenders and brokers are under no obligation, legally or professionally to look out for your best interests.  If a lender does not do CHFA loans, he/she is under no obligation to tell you about CHFA, as an example. 

2. Don’t Count on Rate Quotes to Be Accurate

If you’re calling around or surfing the net for the best rates, there are three hazards. First, rates can change throughout the day so unless you are looking at the same time, comparing rates will be inaccurate.  Secondly, lenders may purposely give you a low rate quote knowing that you’re not going to lock in right that minute. Surprise, when you are ready to lock in, the rate has gone up.  Thirdly, you are not locked in until you lock in - so your rate will probably change.  

3. Your Realtor Knows the Best (and the Worst) Lenders

Realtors get to know lenders very well.  We know whether they return calls, whether their staff has a history of closing transactions on time and whether or not they have a reputation for delivering a high level of service.  If your Realtor hasn’t personally worked with a particular lender, he/she has probably heard something about their company.  And if not, you may want to consider talking with another lender and at least compare what the two lenders told you.

4. Pre-approvals Are Not Created Equally

Your lender says you were pre-approved but pre-approved does not mean the same thing at every lender.  Did the lender pull your credit report?  Did you provide the lender with pay stubs, W-2s, bank statements and 401(k) statements?  Does your letter specify the amount, interest rate and date?  Has your lender put your application through Desktop Underwriting?  

5. Your Interest Rate May Not Be Locked

If you’ve obtained a pre-approval from a lender, you may not be locked-in at the rate your pre-approval is valid for.  Locking in a rate generally includes a separate signed agreement with the lender and possibly a payment of some fee.  Without the lock-in, you are taking your chances that interest rates may go up, impacting your ability to qualify for your mortgage.  For more information on locking in rates, go to HSH.com.