I have promoted the idea of using a local funding lender with my real estate clients for years and have saved my clients a lot of stress, time and money.
We hear so many stories of bad experiences from other real estate agents and members of the public that my clients are simply not running into. Here are some of the issues they are running into when using brokers or out of state lenders.
- Brokers do not loan money. Their pre-approval letters do not have the same weight as a letter from the actual lender. Over the years we have seen so many bad pre-approval letters from brokers that we recommend our sellers not accept them at all and require the buyer get a letter from the lender that will be funding the money.
- Out of state lenders do not know our market, our contracts, our laws or our customs and time-lines. They are notorious for blowing time-lines and putting buyers in breach of contract. Buyers are put under unnecessary amounts of stress and in too many cases lose the home and some of their money.
- Out of state lenders do not have the same vested interest in client satisfaction. The local lenders depend on local real estate agents bringing their clients to them.
- Out of state lenders can hide behind the phone. You can go to the local loan officer’s office and look them in the eye.
- The local lender is at the closing table explaining the mountain of documents you are signing, with the out of state folks you are on your own.
A couple more tips. There is a difference between types of lenders.
- Loan officers at the mortgage lenders, have a license with federal background checks. The loan officers at the banks or exempt. Those who are unable to get a license work for the banks.
- Loan officers at most mortgage companies are paid on commission. No loan, no paycheck for them. They have a vested interest in your success. Most banks and credit unions have salaried staff handling the loans, they get paid the same on Friday whether you get the loan or not.
- Most banks and credit unions are very conservative in their lending practices and have their own overlays that restrict who qualifies for a loan.
- Many local banks and credit unions have a limited offering of loan products. They may not offer the type of mortgage that is best for your needs. Mortgages are not their primary business.
- Mortgage companies in most cases have lower upfront fees than the banks.
- Brokers add their fees on top of what the lender is charging. They may claim they shop for lower rates, but will rarely match the price of the loan if you go direct.
Your experience in you local market may very, but speaking the Realtors and clients around the country my comments apply almost universally.
They will be able to refer you to a great loan officer and lender.