Choosing Your Lender, Attorney and Inspector: Your Right to Shop

What you'll walk away with

• Your right to choose your own providers
• What RESPA says about referral fees and kickbacks
• Questions that reveal who is right for you

In this guide

• Your right to choose
• What federal law says about referrals
• How to compare providers
• Questions to ask any provider

A home purchase involves a team: a lender, a closing attorney, an inspector, an insurance agent and more. You get to choose every one of them. Here's how to shop, and what to know about referrals.

Your right to choose

You are free to choose your lender, closing attorney, title company, inspector and insurance provider. I may share a few names if you ask, and you're never obligated to use anyone I mention. If a builder or other party suggests a "preferred" provider, you can still compare it with others.

What federal law says about referrals

The Real Estate Settlement Procedures Act (RESPA) generally prohibits giving or receiving a fee, kickback or anything of value for referring settlement-service business. It also requires certain disclosures when a referring party has an ownership or financial relationship with the provider. The point is to keep referrals honest and your choice free.

How to compare providers

• Lenders: get official Loan Estimates from more than one and compare rates, fees and cash to close. See my loan types guide.
• Closing attorneys: ask for a fee estimate, who handles your file and how they communicate.
• Inspectors: ask about licensing, experience, sample reports and what is included. See the due diligence checklist.
• Insurance: get quotes early, since coverage and cost can vary by property.

Questions to ask any provider

• What will this cost, in writing?
• How fast will you respond, and who is my contact?
• Do you have a business relationship with anyone else on my transaction?
• What can go wrong, and how would you handle it?

General information, not legal advice. Talk with your closing attorney about your specific transaction.

Sources: CFPB: Shopping for a mortgage · 12 U.S.C. 2607 (RESPA Section 8) · NC Real Estate Commission: Due Diligence Q&A

Provider shopping checklist

• Get Loan Estimates from at least two lenders
• Request a fee estimate from your closing attorney
• Ask inspectors for licensing, sample reports and scope
• Get insurance quotes early
• Ask each provider about any business relationships on your transaction
• Get every cost in writing

About this guide

Joseph Ford is a licensed North Carolina real estate broker and REALTOR®, not an attorney, lender, tax professional or financial advisor. This guide is general educational information, not legal, tax, lending or investment advice, and it is not an offer or commitment to lend. Laws, forms, rates and program terms change; confirm current details with the sources linked above and with the appropriate professional. You are free to choose any lender, attorney, inspector or other provider, and I will never require you to use one I mention. Equal Housing Opportunity.