Why Your Lender Matters
Who you select as your lender matters. This is such an important point to make to first time buyers, and even sometimes repeat buyers who by chance had a positive or smooth transaction their first time around and are lulled into thinking that any lender can perform just as well as their first one. These days one of the most important qualities in a lender is timeliness. It may not seem very important to you at the outset, but that issue will loom large as you approach closing. How can being late or slow affect your transaction? It can add to stress, it can cost you money, and in this market it can mean you don't get the house. Buying a home is stressful and getting a loan is stressful. But working with an inexperienced lender, or a broken bureaucratic system, can take that stress to another level.
How can it cost you money? Well, if you are looking for your first home in Santa Maria or Orcutt CA, chances are you will be considering a foreclosure or short sale property. It is pretty standard for bank owned sellers to write a "per diem" charge into their contracts. So, closing late could have the potential consequence of a $50 - $150 per day late fee. And of course, if you've given notice to your landlord, you could have to pay additional rent, or have to vacate early and stay at a hotel, or pay for storage, and/or move your belongings twice. Also, if your file doesn't close on time your rate lock may expire and your lender may charge YOU to extend it, or that rate may just not be available anymore. If you are buying a short sale, per diem charges could also apply, or if you are up against a foreclosure auction date and you fail to close, the property could be sold, and then all of the time, effort and money expended on the appraisal, inspections, and moving preparations will be lost. All of these are pretty costly scenarios. Not to mention the stress of not knowing exactly when or if you will close.
An eighth of a percent (.125) lower rate, discounted processing fees, or a free appraisal can look good until you are up against a deadline with a lender who can't deliver on time. One particular lender I've dealt with tends to underbid other lenders, but I think they have to because they have such bad word of mouth among real estate agents for being slow and/or late. But, it is difficult for first time buyers to see how quickly that eighth of a percent can become unimportant. Each time I have had a client use that lender, they have regretted it immensely and said it wasn't worth the savings they initially perceived. The tardiness ended up costing them money AND stress. It is important to know that even though the lending environment is difficult, not every lender will put you through this kind of experience.
It is important to choose well.
Copyright © 2011 Tni LeBlanc * Why Your Lender Matters*