- The Washington Times - Friday, June 9, 2000

No matter what you are shopping for, finding the right place to make a deal is important. For instance, have you ever had some mediocre pizza, only to have your neighbor tell you about a great pizza joint you never heard of before? Or have you ever paid too much for a car repair because you just went to the shop up the street?
It all comes down to having the right information. If you know where to go for good deals and good service, why go anywhere else?
When it's time to get a home loan, this principle becomes even more important. After all, you will be conducting a transaction that lasts for 30 years and involves hundreds of thousands of dollars. You don't want to waltz into the first mortgage company you come across. You need an informed opinion.
"Most buyers go along with their Realtor's suggestion of a lender," says Victor Peeke, vice president of Peeke LoanFax, a service that provides mortgage rate information.
"Any professional and experienced agent will have several lenders in mind who are quite good. That loan officer is going to work a little harder for you, because they hope for the repeat business."
Realtors have a vested interest in making sure you work with a good lender. That's because a Realtor doesn't get paid until a sale goes to settlement, and financial hiccups are a leading cause of settlement slowdowns.
A bad experience with a lender also reflects poorly on the Realtor, according to Julia Kriss, chairman of the board for the Northern Virginia Association of Realtors.
"Realtors are blamed or given credit for anything that happens in the home-buying process," Mrs. Kriss says. "No matter whether the Realtor had anything to do with it, everything that happens is perceived as the Realtor's responsibility. That's why our agents demand that a lender be more than good the service has to be excellent."
In case you are wondering, your Realtor won't get a kickback from the lender. Lenders are forbidden by federal law to pay referral fees to real estate agents.
Personal recommendations are the best source for finding a lender you can trust, but how do you know if you are getting a good rate?
The Internet teems with financial Web sites and information about mortgages. Many lenders even allow you to apply for a mortgage on line.
"The ability to comparison shop on line has really empowered the consumer," says Steve O'Connor, senior director of residential finance at the Mortgage Bankers Association of America.
"Now they can privately evaluate a dozen companies from home and get a real sense of the market."
Understanding how the mortgage industry works, such as the difference between adjustable- and fixed-rate loans, is essential if you want to be an informed consumer. The Internet also can give you a sense of the going rates for different loan programs.
"That's the best thing about the Internet," Mr. O'Connor says. "You can get a ballpark estimate of what a reasonable rate is for a 30-year, fixed-rate, for instance. After you have visited a few lenders, you will know what's fair and what isn't."
Armed with that information, savvy mortgage shoppers will know what rates are fair or unreasonable. They also will know what questions to ask when visiting a lender.
"Remember to look at more than rates," Mr. O'Connor says. "You need to know how many points you will pay and what fees would be associated with that loan."
To help you get a handle on all these factors, lenders are required to provide you with a good-faith estimate detailing the fees and charges you probably would pay if you went through with the loan.
"There's no magic that will get you a low rate," Mrs. Kriss says. "If someone is quoting an extraordinary rate to a consumer, there's probably a problem somewhere."
Even if you can save one-eighth of a point on your rate, it might not be worth it.
"A problem with working with a company you found on line but have never heard of is the quality of service," says Jim Maclin, president and chief executive of Preferred Mortgage.
"You might do just fine, but how do you know? It's not really a bargain if your transaction is being held up by some clerk in South Dakota who has 1,000 loans to process. We think consumers should be able to reach across the desk and shake hands with their lender."
Also, be careful if you are at a Web site that claims to offer the "best rates from America's best lenders." Rather than an objective list culled from lenders around the country, you probably will be looking at a list of the Web site's advertisers and business partners. You might find a winner, but how can you know?
That's why the most obvious way to find a good lender is also the best: Ask your Realtor.
"Nothing turns a Realtor's hair white faster than seeing their client mistreated by a lender," Mrs. Kriss says. "That's why we are so careful about the two or three lenders we will recommend. In every transaction, we put our business on the line, and the last thing we are going to do is steer a client wrong when it comes to choosing a lender."

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