Dave Ramsey Says Home Buyers Should "Find a New Lender" in This Situation

Read this important advice before looking for a mortgage lender.

Finding a mortgage lender can be a really confusing process. There are lots of different kinds of home loans out there, and many different types of lenders including banks, credit unions, and online lenders. There are also myriad criteria to compare, ranging from origination fees to interest rates, all of which can help you decide which loan provider is right for you.

Although there's a lot to keep in mind, there's one red flag that finance expert Dave Ramsey says should be an absolute deal breaker if you're considering a loan provider.

Ramsey warns that a lender isn't worth borrowing from if they fail in this task

So, what's the big red flag that Ramsey warns about that the finance guru thinks should prompt you to walk away from a home loan provider? It's simple. You should steer clear if the lender isn't willing to "clearly explain your mortgage options and answer all your questions so you feel confident in your decision."

The Ramsey Solutions blog explains that good lenders will recognize that you're making a big decision and taking on a major financial obligation when you're borrowing to buy a home. Those who are offering a fair deal for consumers will be forthcoming about the loan terms and financial products available and will give you the information necessary to help you decide if a loan is right for you.

"If they don't, find a new lender," Ramsey urges. "A mortgage is a huge financial commitment, and you should never sign up for something you don't understand!"

Is Dave Ramsey right?

Dave Ramsey has given some questionable mortgage advice, including suggesting a 15-year mortgage is a better option than a 30-year while discounting the opportunity cost that comes with taking a home loan with a shorter payoff time.

But, when it comes to this issue, he is 100% correct. Lenders should be on the same page as you, and it's in both your best interest and the lender's best interest for the loan provider to ensure you're not taking on debt you can't pay back.

If your lender won't help you to understand the details of a mortgage and won't work with you to find the best loan for your situation, this is a huge sign that they are trying to profit off of shady deals such as high fees or an interest rate that will jump up dramatically after a period of time.

Mortgage lenders are required by law to provide you with certain consumer disclosures and, following the financial crisis of 2008, reputable lenders understand that no one benefits when people get home loans they can't afford after a few year's time.

If a mortgage lender is trying to hide the details or isn't patient enough to answer your questions and explain the loan products offered, you should walk away and find a bank or credit union that cares about you as a customer rather than just as a person they can take advantage of.

Your home will likely account for a huge part of your net worth and your mortgage will probably be the biggest debt you have. You don't want to trust important financial decisions about your house or loan to a lender you don't feel confident in. So, heed Ramsey's advice and walk away if you think your questions are going unanswered.