How should I compare lenders?

[Anonymous]

A few months ago I was pre-approved from a single lender for my price range.  They asked for my income, debts, and ran my credit.  I just signed a contract to purchase a home.  Now I am searching for the best mortgage lender.  My buyer agent (who is a very close friend of my uncles) gave me a list of the a few lenders that she recommends and I've also found a few myself.  The list includes lenders from banks, credit unions, and brokers.  I've called them all.  They were all very friendly and helpful.  They all sent me their approximate loan cost sheets.  The funds needed to close and estimated montly payment are very close in all of the lenders approximate cost sheets.  There is quite a bit of difference in the names of items on the sheet though.

My buyers agent (again a friend of the family) is telling me that I should choose the lender I'm going to use from these approximate loan cost sheets.  I'm a litte unsure about that advice though just because these lenders don't know anything about me.  They didn't run my credit (my Equifax FICO is 799 though).  They don't know my income.  They don't know my debts.  We only talked on the phone for 30 minutes or so.  How can I trust that their approximate costs are close to the real costs?

I thought that once I got to this point in the home buying process I would apply for a mortgage at maybe 2 or 3 lenders.  I understand that there might be some application fees for each.  Here the lender would get more information about me and be able to give me a more accurate cost of the loan.  I'd also get it in the form of a GFE which would allow me to compare across multiple lenders much more easily.  However, my buyers agent is telling me that nobody does this because once the application process has started the ball is rolling and backing out isn't something I should do.  She said she'd be surprised if a lender would let me apply if they knew I was going to do this.  But I thought one of the points of the GFE was to make shopping for a mortgage a simpler process?

Can someone please give me some advice on what I should do in this situation?

[ShanetheMortgageMan]

Most lenders fees & rates will be similar to each other, if any are outlandishly high throw those out, and any that are suspiciously low make sure you grill them.  Go with the lender that makes you feel they have a perfect understand of your situation, and that you are most confident you'll be able to close with on time.  You can get GFE's from lots of lenders, but the GFE doesn't mean anything until the rate is locked in.  The GFE just shows you the fees being charged in connection with the mortgage, which are set once the GFE is issued, but the interest rate isn't (nor are discount points - keep in mind).  In order for just about any lender to issue a GFE, since the fees are binding, we'd need to get all of your income documentation, asset documentation, check credit, get the details of the purchase contract, and contact the closing agent to get an Estimated HUD-1 so we wouldn't be underdisclosing any 3rd party fees... so as you can see it's usually not a quick process to get a borrower the GFE.  Up until then most lenders will initially provide what you have probably already received, a fee estimate.

How long do you have until closing?

[Anonymous]

Closing is not until May 27th.  The contract states that I have to apply for a loan by Mar 23rd and have a commitment by Apr 15th.  I have received the estimated cost sheets for both FHA and Convential 30 year fixed loans from all lenders I have contacted.  I looked at all of the numbers last night and after taking my situation into account I am going with an FHA 30 year fixed loan.

My biggest worry is that I pick one of the lenders I've already spoken with and start the loan application.  Then a few days later I get the GFE and it's not close to what was given to me in the estimated cost sheet.  Now I've wasted several days and have to start the loan application process with a different lender.  I do have 60+ days until closing, but there are these intermediate deadlines that I don't want to have any problems with.  Do I have no reasons to worry about such problems?

It really just seemed to me that comparing multiple GFEs was the safest way for a buyer to shop for a mortgage.  But now that my buyers agent is telling me different I don't want to go out and piss off potential lenders by supposedly wasting their time with my application just so I can have a GFE.  I have brought up all of my concerns with my buyers agent and some of the lenders that I've talked to.  It's good to have independent opinions though.  Thank you very much.

Here is some extra info about me (if it helps at all):

Loan Type: FHA 30 year fixed

Home Sale Price: $167,900

Income: $70,000 / year (salary)

Equifax FICO Score: 799 (It was actually 812 and it dropped the month after my credit was ran for the pre-approval)

Debt-to-Income Ratio: Well below FHA limits.

Thanks again.

[ShanetheMortgageMan]

You are welcome.  It appears you have some time to get things going, so I would start the process with whichever lender you feel the most comfortable with, you should get a GFE within 3 days, and if it looks good then it sounds like you've found the lender you'll want to stick with through the entire process.