Why Your Lender Matters

By
Real Estate Broker/Owner with Mint Properties, Lic. #01871795 Lic. #01871795
http://activerain.com/droplet/6Ch

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*

Posted by

Tni LeBlanc, Broker
(805) 878-9879 mobile/text

tni@mintprop.com
www.MintProp.com
CalBRE #01871795

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Rainmaker
1,363,685
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Area Real Estate

This really can't be stressed enough in any market. As soon as it's crunch time & the lender can't deliver it's going to cost the buyer in one way or another.

Mar 14, 2011 04:44 AM #45
Rainer
131,561
Monica Atherton
The Associates Realty Group - Temecula, CA
Your Temecula Real Estate Gal

AGREE!! AGREE!! AGREE!!  Getting a client to understand the importance of chosing their lender wisely is top on my list of to-do's.  It can affect them in so many ways from someone really looking out for their best interest, rate and closing on time.  Buying a home is already stressful, why not take one of the stressors out of the scenario.

Mar 14, 2011 04:54 AM #46
Rainmaker
199,003
Dora Griffin
D A Griffin Financial.LLC - Fort Thomas, KY
NMLS 6380

You hit on some very good reasons to choose wisely! It is difficult for borrowers to choose a lender because it is not about the rate, yet that is what they seem to focus on.  I have a practice of telling potential borrowers they will not see a real difference in interest rate from lender to lender perhaps; what they will see is how it is explained or differences in other costs and service.

Mar 14, 2011 05:33 AM #47
Rainer
37,591
Brad Hornshaw
Brad Hornshaw Realtor Lynnwood, Bothell, Everett - Lynnwood, WA
Realtor, Listing Agent, Buyers Agent, Investments
Hi Tni Another well laid out post. A good lender is so important to a smooth trafsaction.........Brad
Mar 14, 2011 06:31 AM #48
Rainmaker
296,606
Gwen Kelly
Broadmoor Realty, Inc - Long Beach, CA
Long Beach, CA Real Estate

Great post ~ the Lender can be crutial to the Buyer's offer even being accepted, after which we want to see a closing...  I have to admit that I also cringe when someone wants to go with a lender that I have not worked with...

Mar 14, 2011 06:45 AM #49
Rainer
67,802
Nate Herd
Loan Officer-Amerifirst Financial (0013635) Arizona & Utah - Phoenix, AZ

hi Tni,

I agree with you, as a lender I market myself on my ability to get the job done quickly and efficiently NOT on the rate. There are to many people who are only concerned about the rate and don't understand all of the difficulties that go into the loan process, it is so important for Realtors to have a good lender that they recommend, when I do a good job on a loan it makes the Realtor look good as well.

Mar 14, 2011 08:40 AM #50
Rainer
19,923
Kevin Sykes
Keller Williams Realty Greater Howard County - Columbia, MD

Great information I Love It!!

Mar 14, 2011 10:07 AM #51
Rainmaker
644,568
Jeff Pearl
RE/MAX Distinctive / LIC in VA - Lovettsville, VA
Full Service Full Time Realtor

Agree, choice of lender can make a huge difference, and be the difference between a  smooth or stressful process. No one needs the frustration of dealing with a incompentent loan officer.

Mar 14, 2011 11:28 AM #52
Rainer
128,580
Kathy Godin
Raleigh Mortgage Gals - Raleigh, NC
Passion for Serving

Articles on how to select a lender focus on rate.  Prospective customers focus on rate - they understand rate.  I wonder how many of them are driving second-hand Yogo's - the cheapest car on the market.

Mar 14, 2011 12:29 PM #53
Rainer
298,412
Momentum Realty
North Orange County CA Real Estate Specialists - Yorba Linda, CA
Orange County CA Real Estate Agent

Hey Tni,

I'm re-blogging this post for sure! I can't tell you how many clients (usually 1st time buyers) were lured away by false promises and too good to be true Good Faith Estimates, only to return with an apology and 1-2 weeks left to close. We've pulled off some miracles and Hail Marys in the past, but nowadays it's a whole different ball game; there probably wouldn't be time to make it happen with the way lending is right now.

Thanks for the great post!!

Gina Lemos

Mar 14, 2011 12:31 PM #54
Rainer
23,357
Susie Johannes
Keller Williams Arizona Living Realty - Lake Havasu City, AZ
SFR

Great post and entirely true! I always tell my clients that they need to work with a local lender. I emphasize the importance of being able to contact their lender often on the spur of the moment. You can't do that with the online companies and even out of state lenders are difficult. Very important post!

Mar 14, 2011 12:51 PM #55
Rainmaker
67,119
Brenda, Ron, Lee Cunningham & Tara Keator
West USA Realty - Phoenix, AZ
Realtors, Homes for Sale - Phoenix Metro

So true!  Buyers tend to go through a lot of stress without problems with the lender!

Mar 14, 2011 02:11 PM #56
Rainmaker
1,428,704
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

A lender that can deliver on the promises made in a timely manner is worth a premium in todays market.

Mar 14, 2011 02:44 PM #57
Rainer
69,004
Robert Courtney
Lihue, HI
Century 21 All Islands, RA, CDPE, MCRE, CIAS

Tri - sound advice that we seem to get and know because of our daily involvment in this business.  Some people just will not listen.  Bookmarked this post to refer them too.  Sometimes hearing this from a third party may drive the importance home!  Thank you for the post. 

Mar 15, 2011 02:19 AM #58
Rainmaker
214,780
Todd Anderson
You In Park City group - KW Park City Keller Williams Real Estate - Park City, UT
Park City | Deer Valley Real Estate

Great wrap up at the end. We as Realtors usually recommend lenders based on their timeliness and ability to get the loan done. If the loan doesn't make it through, the home isn't bought.

Mar 15, 2011 03:04 AM #59
Rainmaker
212,926
Sandy McAlpine
RE/MAX EXECUTIVE - Cornelius, NC
Search Lake Norman Homes For Sale - Lake Norman NC

I always give out some names of good people and then let the buyers shop for themselves!

Mar 15, 2011 04:47 AM #60
Rainmaker
411,967
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Akerly- That's a good practice.  I also give people a list of names.  Once they turn to the internet -- all bets are off.

Ben - In their defense I will say that some people just won't take guidance on this.  They think they know best -- and there is only so much you can push on the issue.  When it all falls apart, their eyes tend to open.

Thanks Ginny!  I too go over this with my buyers.  Very important.

Rick- Very true I hate it when some horrible lender messes up the overall impression a client has of the process because they did not do their job well.

Gary - That is too funny and very true.  Love Ray Charles.

Lyn - Very true - it's all about crunch time.

Monica - I agree, with a good lender getting the loan doesn't take center stage and the process becomes less stressful.

DA - That is so much of the info out there.  Fact is with my clients that are shopping around extensively the difference on FHA products comes back within $500 most of the time with the same rate.  Choosing an unknown internet lender over $500 is just nuts IMO.

Brad - I agree.

Gwen - True I have had offers accepted because we had a lender with a great reputation and that meant more to the listing agent who in turn recommended our offer to their client.  It matters.

Nate- I agree let's all do our job and look good.  Having a smooth experience for the buyer is the goal - and I want people who work toward the same goal.

Mar 15, 2011 11:44 AM #61
Rainmaker
411,967
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Thanks Kevin!

Jeff - Absolutely!

Kathy -- LOL.  I agree, and in the case of loans you are paying for service so you might as well get some!

Thanks Gina - Don't you just hate that when people fall for the okey-doke?  How many stories are out there though where people didn't get saved and had real consequences?

Susie - I agree, using a local lender is the way to go.

Brenda & Ron - Yes, the wrong lender can mean a wild ride.

Gene - Very true!

Robert - Yes, sometimes people don't listen - but down the line what you've told them makes sense.  It's unfortunate but you can't insist.

Todd - True, we want the job to get done with as little hassle as possible because it makes it better for the client.   I would never recommend a poor lender no matter how much I liked them personally, etc. you have to be able to perform.

Sandy - Sounds like a plan.  It's good to give them guidance.

Mar 15, 2011 12:13 PM #62
Rainer
298,412
Momentum Realty
North Orange County CA Real Estate Specialists - Yorba Linda, CA
Orange County CA Real Estate Agent

Hi again Tni,

I totally agree! Although, at least with the new licensing requirements (NMLS), borrowers have a better chance of picking a LO with skills nowadays, than they had a few years ago. The exams were definitely not easy, and you had to have a decent amount of knowledge and a good amount of experience in the mortgage industry, in order to have passed. Even still, you're very right, people are getting burned by choosing the wrong lender.

Thx again for the post & thx for responding to my comment!

Gina Lemos

Mar 17, 2011 09:03 AM #63
Rainmaker
411,967
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Gina -

Very true.  Raising the bar has gotten rid of some of the people that had no business doing it.  I just bought some of the NMLS materials, not because I want to do loans but because I want to see what is required.  Not sure I will take the test but I want to see what is being taught and required.

Hopefully we will see some improvements in both fields.  I know a lot of not so great agents have gotten out of real estate.  It is getting easier because the quality has gone up in real estate too.

Tni

Mar 19, 2011 02:52 PM #64
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