1. Why Picking the Right Lender is so Crucial
Having a bad lender experience is so unnecessary and yet, it happens fairly often to those who don’t know what to look for.
A great lender can tip the scales in your favor in a multiple offer situation; they can advocate for you with the Listing Agent. The flip side is that some lenders can hurt your chances even if your offer price is competitive.
An unorganized or overly-bureaucratic lender can make your home buying life miserable. It may even blow up your deal or put your Earnest Money at risk. Lenders who don’t do “Purchase Loans” as their primary line of business can be too casual about deadlines and contract commitments – timeliness is not as critical with re-fi’s.
There are certain conditions that have to be met in order for the Financing Contingencies in our contracts to protect you. We can’t just ask for extensions on deadlines and expect for them to be granted; it is often not in the sellers to do so. If we don’t get information in a timely matter, your Earnest Money will be at risk.
There is no financial incentive to me if you use a particular lender; I just want you to use a good one that works fast. My concerns are strictly performance and experience related. I want this to be an enjoyable and smooth process for you – that’s normal for us.
2. Local and Available is almost always Better
- Choose a Lender in the same time zone and city. You will want a Loan Officer who will answer the phone evenings and weekends. Why? Because sometimes we will need help from them during those times and when we do, it’s critical.
- I prefer local, dedicated underwriting too. An underwriter in a remote location can treat you like a file number instead of a person. If they start asking questions at the end that could have been asked much earlier it causes major stress. This can also be a symptom of a file being submitted to Underwriting late. All the more reason to get Underwritten up front.
3. Pick Someone who does the Hard Work Up Front
- You want to get Pre-Approved and underwritten up front so we can offer fast deadlines to win offers. A loan Pre-Qualification is meaningless when savvy agents and sellers are involved.
- This also allows you the breathing room to map out a strategy with regards to how the loan will be structured in various scenarios. What happens if the house does not appraise? Should you look to buy down the interest rate? Do we expect to get any seller concessions towards closing costs?
4. You might as well get the VIP Treatment
- Responds quickly when you need something – you have their direct cell number.
- Doesn’t ask you for information and documentation they don’t really need OR could get by without.
- Helps you take the shortest path at every turn.
- Educates you along the way so you know what to expect.
- Communicates proactively approaching each milestone.
- Comes in early on Deadlines – does not risk your Earnest Money
- Is able to deliver your “Clear to Close” a few days early so there are no last minute surprises
- Keeps the loan package short (as few documents for you to sign as possible)
- Does not require a Funding Number at closing to release all the funds. We can sit at the table for several minutes waiting on this…
- Attends the closing in person if possible
5. Look beyond the Interest Rate
- I am all for our clients shopping around and comparing interest rates – in the beginning. You will see why I say that on Item #3.
- Get fee worksheets from whoever you want – let’s make sure you are comparing apples-to-apples because if you are not used to looking at these numbers, it can be daunting at first to see what the costs are for creating your new loan and servicing that loan for 30 years.
- My strong recommendation is to get the Lender vetting done way up front so that you can focus on the purchase and the house when we get into the “red zone” (Under Contract). Once you have a binding contract, the clock starts ticking on your deadlines and you will need to move through several decisions quickly. Shopping lenders while days tick off of your Appraisal Contingency is stressful and may back you into a corner on your deadline. We usually want the ordered as fast as possible once you go under contract.