How to Interview an Agent and a Lender Before You Hire Either One

Most buyers hire the first agent they meet and the first lender who picks up the phone. I understand why. You have a house on your mind, both of them sound like they know what they're doing, and interviewing feels like homework nobody assigned you.

Sit with one fact for a moment. Both of those people work for you. In over three decades, the two hiring decisions I've watched change a transaction most are which agent a buyer picks and which lender a buyer picks.

So let's do it properly, and I'll give you the actual questions, because "interview a few of them" is useless advice without them.

Your agent works for you, and that isn't a figure of speech

A lot of buyers quietly experience it the other way around. The agent seems to hold the keys, so the buyer behaves like someone auditioning for access. It's backwards. That agent needs to look out for what's important to you and what your needs are. That's the job.

Interview a few agents before you select one. Not because the first is bad, but because you have nothing to compare them to.

And don't be afraid to ask questions. There's no such thing as a stupid question in this business. There's a great deal of money riding on this, and your agent can make or break a deal. Anybody who makes you feel small for asking has told you something useful about themselves.

The test is listening, not charm

What I actually want you to evaluate isn't personality. Does this agent listen to your concerns? Do they hear what matters to you, not just the bedroom count but the whole picture? And then, out in the field, do the homes they bring you correspond to what you told them?

That second part is the real test, because it gives you evidence instead of an impression. Anybody can nod in a first meeting. Fewer come back with properties that reflect what you actually said. When what they bring you doesn't line up, say something and watch what happens next.

An honest aside, because I don't want you overweighting warmth. I've done business with agents who were dry as a bone. Not chatty, not personal, businesslike start to finish. They knew exactly what they were doing, and that was fine with me. Generally speaking, you won't end up close friends with your real estate agent. They'll close the deal, hand you the keys, and go away. That isn't cold, it's the job. You're hiring competence, not a friendship.

If you're not feeling it with an agent, by all means don't hire them. Move on to somebody who'll represent you the way you ought to be represented. You'll know, and if you've already started and it isn't working, you're free to go find someone else. Before you sign a buyer representation agreement, read it and ask how long the term runs and how either of you ends it.

Questions to ask an agent before you hire one

• Tell me back what you heard me say I need. State your situation once, then ask them to repeat it. This one does more work than the other eight combined.
• How long have you been doing this full time, and how many buyers have you represented in the last year?
• Which parts of the state do you work in regularly, and how often do you write offers there? You want somebody in the paperwork often.
• When you bring me a property, will you tell me why it fits what I told you, and what about it doesn't? The second half of that question separates people.
• Have you represented buyers using my loan type recently? FHA, VA, conventional, and jumbo transactions don't all behave the same way.
• Walk me through your offer process. Who drafts it, how do you set the contingency timelines, how fast do documents turn around?
• Walk me through a request for repair you handled after an inspection. That's where deals get tense, and you want to hear they've been there.
• How do you communicate, how often, and who do I reach when you're unavailable?
• Can I speak with two buyers you closed with in the past year?

Lenders are not interchangeable either

Now the other half, and it's the half more buyers skip.

My recommendation is that you look at about three lenders before committing to any one of them. Do your homework here. Not because the first is doing anything wrong, but for one plain reason: lenders are not all the same. They carry different products, offer different programs, and apply different guidelines on top of them. The same buyer can sit in three offices and get three different recommendations, and there's no way to know that without asking three times.

In a Consumer Financial Protection Bureau survey of people who took out purchase mortgages in 2013, 70 percent said they relied "a lot" on their lender or mortgage broker for information about mortgages.¹ I'm one of those professionals, so let me give you the other half honestly: the CFPB noted that lenders and brokers have a stake in the sale. That is exactly why I want you to compare answers and ask for the important ones in writing. Mine included.

So the first question isn't about a rate at all. It's whether that lender has the type of products that are going to be beneficial to you, given your actual file.

The second is about cost, and here's where buyers stop one question short. The rate is one number. What the loan costs you to obtain is a different number. Ask for both, in writing, and read them together. Once you've applied on a specific property, federal rules generally require a written Loan Estimate within three business days.

The lock, and the questions almost nobody asks

This is the part I care most about, and buyers almost never raise it on their own.

A rate lock is an agreement with your lender to hold a specific set of loan terms for a defined number of days. Plain language: your terms stay still while your escrow runs.

Generally speaking, your loan wouldn't be locked in until after your purchase contract is fully executed, meaning signed by everybody. That's when there's a property, a closing date, and a length of time to size the lock to. You can take an extended lock before you've identified a property. That's worth asking about, but it's a different product with its own terms.

Now the timing. Most purchase contracts run 30 days, and escrows of 45 and 60 days are common too. Some buyers need longer on purpose: if you're in a lease and waiting for it to expire before you move, a longer escrow is genuinely beneficial to you, but only if your lock covers the entire length of it. So before you select a lender, find out whether they offer a lock period that long and what a longer lock costs you. A lot of times they will. Sometimes they won't.

Then the part where I'll be blunt, because I've watched this one hurt people: take the lock. Don't float and play the market while you're in escrow.

Here's the mechanism, because I'd rather you understand it than take my word for it. If rates move against you while you're in contract, your proposed payment goes up, and so does your debt-to-income ratio, meaning your monthly obligations measured against your gross monthly income. Your debt ratio is one of the things your qualification rests on. So what you're risking by floating isn't a slightly different payment. It's your ability to purchase the home you're already in contract on.

One last thing, and it takes ten seconds. On the day you lock, ask your loan officer two questions: what is the interest rate, and what does it cost me? Write the answers down with the date. Near the end of the transaction a Closing Disclosure arrives, the CD, and your principal and interest payment ought to match the day you locked.

Questions to ask a lender before you commit

• What loan programs do you offer, and which do you close regularly? Offering and closing are not the same verb.
• Based on my file, which program do you recommend, and what's the second-best option, and why not that one?
• Do you apply guidelines on top of the program's own requirements? The industry calls these overlays, and they're a big reason two lenders answer the same buyer differently.
• Will you submit my file to automated underwriting and give me the findings? Where your loan type allows for it, the strongest document you can carry into an offer is a Fannie Mae Desktop Underwriter (DU) certificate, and DU findings are not a final loan approval.
• What will this loan cost me to obtain, in writing?
• When do you lock, and what lock periods do you offer? Ask whether they can cover a 45-day or 60-day escrow.
• If I need a longer escrow than that, is a lock available for the full length, and what does it cost?
• If the appraisal or a condition runs long, can the lock be extended, and what's the process?
• If I lock and the market moves in my favor, is there any option to adjust?
• Who handles my file day to day? Are you my loan officer start to finish, and who's my processor?
• Is my loan underwritten in house or placed elsewhere, and what's your underwriting turn time right now?
• What do you need from me, all of it, up front? Pay stubs, bank statements, W-2s, tax returns.