Five red flags to look out for when working with a lender…
Number one: Application fee. If they’re trying to charge you an application fee upfront just to do the pre-qualification, this is not normal and you should shop around.
Number two: No credit pull. Every lender should be pulling your credit to do a full pre-approval. There’s a lot of stuff that shows up in the credit that needs to be reviewed, and you’re not going to get an accurate pre-approval if the lender has not pulled your credit.
Number three: They don’t collect documentation. Every lender should be collecting pay stubs, W-2s, tax returns—everything needed to fully verify that what we put on the pre-approval matches up and that you are good to go.
Number four: They won’t discuss the rate or the closing costs. Typically, what this means is that their rates and fees are so high that they know if they discussed them with you upfront, you probably wouldn’t work with them. So if they’re being very vague or won’t give specific answers on what their rate is and what the cost is that comes with that, chances are it’s pretty high and you want to shop around.
Number five: They aren’t responsive. Lenders should be able to respond to you via text, email, or phone call, and they should be able to do it in a timely manner. If you’re working with somebody and it takes them multiple days to get back to you on simple tasks, you should definitely shop around and find a lender that’s more responsive.
Doing a home loan can be a very stressful process, so avoid these red flags to make sure you’re working with somebody who isn’t going to add on to the stress of that situation.
