Help me choose a mortgage lender

[tomorrowsomewherenew]

We are in the inspection period with a house we are purchasing. We will be purchasing the home with a VA 30-yr loan. Our realtor referred us to a lender they like to work with. The lender originally quoted us 4% with approximately a $2,500 origination fee. After shopping around, I locked in a 3.375% rate with about $1,200 in credit. I called lender #1 to let them know we wouldn't be proceeding with them. They called back and offered to drop the rate to 3.5% and said the origination fee was a mistake. I ended up speaking with the head person at lender #1 and he implied that lender #2 is doing something fishy and doesn't understand how they could be offering that deal. Lender #2 is McGlone Mortgage, and Lender #1 is a local no-name place. The reviews for both companies look good. We've started the paperwork with both places, and so far Lender #2 has been better (noticeably fewer mistakes in paperwork).

This is our first time purchasing a house using a mortgage (we've purchased once before, but it was much less expensive and paid cash). On the one hand, I value having someone where we can knock on their door, but I really can't say that's worth an extra $1,200 plus the extra interest. For those of you that have made multiple purchases, tell me, am I naive, or is lender #1 just looking out for themselves?

[neo von retorch]

I'm going with my credit union. They are local, and their rates and closing costs are very competitive. They are competent and communicative, and I think that's valuable. Of course, over the course of a 30 year loan, the rate can have a big impact. In this case, Lender #2 sounds better in every aspect, unless they have some closing costs that aren't accounted for in this comparison. (I went to aimloan.com and was impressed with a really low rate until I saw that the closing costs included points and, overall, were about $10,000 more than I'm paying.)

[tweezers]

I've bought two homes and refinanced three times.  We've always gone with an internet lender whose rates were far more competitive than the big banks and our local credit union.  In all cases the mortgage ultimately ended up with Wells Fargo or US Bank (both of whom had interest rates >1% higher).  I would absolutely go with the lower rate lender.

[tomorrowsomewherenew]

Thanks, I am thinking we will go with lender 2. I was glad to hear from someone else who has gone through an internet provider.

[LeRainDrop]

I'd go with lender #2.  Frankly, the lenders can always sell your loan after closing -- that's really not uncommon -- so unless there are alarm bells in the reviews, I would pick based on dollars.  It's a bonus that lender #2 also happens to be performing better on paperwork preparation.

[goduke]

Hi, we are in the same boat right now, deciding between McGlone and a local lender. Our local lender did the same thing to us (got rid of the fee and dropped the rate, but still not as low as McGlone). Did you end up going with McGlone? Did they close within 30 days?