Mortgage Recommendations

Adam Garrett
Jul 14, 2023
6 min read

Updated: Jun 9

Consider Your Primary Bank, Especially If You Have a High Relationship Status Tier That Guarantees a Rate Reduction

Here are some examples of institutions with mortgage rate reductions tied to relationship status/account type tiers:

Bank of America Preferred Rewards

BMO

Charles Schwab

Chase

Citi (up to 5/8% off interest rate)

HSBC

Kinecta (up to .375% off rate & up to $1k closing credit)

UBS (Up to .5% off rate for Jumbo Loans)

US Bank (.25% closing cost assistance ($1k at or above $400k)

Wells Fargo (Up to 1% off rate for Jumbo Loans)

Get Multiple Quotes from Different Lenders, But Beware the Fine Print & Compare Apples to Apples

I recommend getting rate quotes from multiple lenders, but keep in mind that the details of rate sheets are very important. A lower cost is about more than just lower interest rate, such as the cost of mortgage insurance for conventional buyers putting less than 20% down and FHA buyers. Adam has seen where lenders have purposely excluded certain costs in order to appear lower than other options. Also, be sure to ask lenders if the quote that they are giving includes taxes, insurance, and points that would buy down the rate. It's best to have the following the same when comparing quotes:

Purchase Price
Down Payment (even if different loan types offer different down payment options, doing whatever is possible so that at least some of the quotes are relatively the same from each lender, i.e. a 5% down FHA quote vs a 5% down conventional quote, even though only 3.5% down is necessary for most FHA loans, but still getting the 3.5% down quote separately)
Points for buying down the rate (ideally with at least one quote with zero points from each lender and loan type)

It is best to get pre-approved prior to the home search. Not all lenders have the same programs available, & some programs are only available with one institution (i.e. NACA & USDA Direct).

Get Multiple Quotes on the Same Day from Different Lenders

While locating lenders that you want to rate shop for can occur over a long time span, it is best to do all rate quotes on the same day, with rate sheets that you can show to competing lenders to see if anything was left out. That way, the overrall market rates are the most similar, which is more of an apples to apples method than allowing time to pass between quotes. That will also help to minimize credit impact, although with that, it should not matter so much with it being the same day as long as it's within a 7-14 day time span.

It Doesn't Hurt to Request a Match

Also when comparing rates of different companies, if you like the personality or other non-numerical qualities of a lender but the rates of another are better, ask them if they can match the numbers so that you can still get the person you feel more comfortable with.

Loan Terms & Types (Cash -38 years)

On one hand, you have purchases that purchase in all cash. On another hand, you have as high as 38 year loans with USDA Direct at 1% interest (for very low income borrowers in rural areas who meet various qualifications), & even those terms sometimes get stretched with refinances and can even eventually turn into reverse mortgages.

Typical Mortgage Loan Duration

While there are other varieties, typically, people talk about 10-year, 15-year, 20-year & 30-year mortgage loans for homes. The 2 most common are 15-year and 30-year loans. With a 30-year loan, you'll typically be paying more interest than principal starting off, while with a 15-year loan, you'll typically be paying more principal than interest starting off. Most buyers opt for the 30-year route because it's more difficult to afford the payments on a 30-year home for the kind of house that they want. Interest rates on 15 yr loans are lower than those for 30 yr loans. One option is to buy originally at a 30-year rate, then refinance to a 15-year rate once your income has increased and when rates have gotten lower. That is what I did on my first home. That said, in some cases, the going rates will go up between when you purchase and when you are ready for a refinance.

For land-only mortgage loans, typically they're anywhere from 5-20 years.

For commercial mortgage loans, typically they're 5-25 years.

Main Loan Types

FHA Loans

Loan limits vary by Metropolitan Statistical Area. That limit is $690k in Hampton Roads in 2024. Look up loan limits by county here. Keep in mind as well that a $690k loan limit is for the loan portion itself, not the purchase price, so a $690k loan limit could be applied towards a property of higher cost, i.e. a $720k purchase price with 3.5% down.

Ask Adam for Lender Recommendations

While no lender will be able to do a perfect job, ask Adam for expectations, both positive and negative, with any affiliate. He can often mention some negatives as no one is perfect, but prefers to not publish that information. Adam has purposefully excluded certain lenders at times due to negative experiences. Even when Adam does not refer a lender, let him know if you are having issues, as sometimes you can transfer which lender you are using with the same mortgage company, and sometimes the seller will let you change mortgage companies.

Get a Manually Underwritten Loan Prior to Offer

You also significantly reduce the chances of a delayed closing. You may be unaware, but some prequalifications/preapprovals are better than others. A pre-approval is better than a prequalification, and a manually underwritten pre-approval is better than a more typical preapproval. You will eventually need to take all the steps of manual underwriting for your loan, but buyers that do it in advance of the time of the offer can reap dividends in higher probability of winning offers & lower probability of hiccups. Most buyers won't take this step prior to offer, but if you do, your offer is stronger and you are much less likely to be wasting your time & a seller's time with showings and offers.

I've actually gotten to the week of closing, only to be told by the lender that 2 buyers together can't qualify. That's after the buyers and I did a number of showings, made offers on more than 1 property, after the seller accepted, after the buyer paid for the appraisal, and after the buyer paid for the home inspection. I've also been there on the seller side where I am representing the seller, where the buyer had moved everything out of their house the weekend before closing, only to find out the week of that the buyer is unable to close. The buyer in that situation lost their earnest money deposit, but while the seller took the EMD, they did not sign off (per my advice) on the release and hold harmless language of the release. By doing so, we still had the option to pursue the buyer for further damages with a lawyer, and did get a lawyer involved. The actual damages to the seller were greater than $10,000 (including but not limited to the difference in price between that contract and the subsequent contract we ratified), and if the situation had been slightly different, we may easily have pursued that buyer for that money. By getting a manually underwritten loan in advance, you decrease the chances of losing your earnest money deposit as well.

Questions to Ask Lenders

I also recommend that you ask each lender you interview the following questions:

1. What percentage of your loans close on time?

2. How long do you typically need to close on a mortgage loan from the time of the contract?

3. Are there any programs that you can think of that can help reduce my home cost?

4. Are you ever able to match rates if another lender has lower rates or a closing cost rebate? What about the 1% closing cost rebate that a company is offering me (after you've asked Adam the name of the company first that he doesn't like to publish that gives 1% CCA rebates for his referrals & gotten rate quotes from that company)?

5. Do you work on Saturdays and after 5 PM? Do you have certain hours? What is your time zone if it's not Eastern? If there are days or times that you don't respond to calls, do you ever make exceptions and if so, for what sort of reasons?

6. What percentage of loans does your bank service/hold in the long run out of those that you initiate?

7. Do you text?

8. Do you offer manual underwriting as an option prior to the time of the offer?

9. Do you allow escrow holdbacks?