I read an article recently about how to shop for a mortgage lender. The opening of the piece stated that many people find a lender through their realtor, making it sound like that is not a good idea and of course giving no specifics. A little misleading in my humble opinion. This is the perfect time to comment on that topic. One of my first-time homebuyers just closed (2 weeks late) on a home that they nearly lost due to the inexperience of the lender. The intense stress of this buying experience was completely avoidable had they worked with a lender who understood the unique aspects of both the clients and the home they were purchasing. There are a lot of variables in securing financing that must be considered in order to know what lender will bring the best terms and the greatest chance of a stress free (is there such a thing? I’m not sure), on-time, successful closing. So, should you consult your Realtor about choosing a lender? Let’s use this most recent example to see how things can go wrong when choosing a lender.
- Communication: Not once did the lender proactively communicate with the clients or myself about what was needed. As a result, when it finally became clear that something was needed of the buyers to move to the next step, it was a last minute request, never in writing, and quite confusing for buyers who have never purchased a home before. The future home-owners had to take many unplanned hours away from their jobs to submit and resubmit items that should have been requested in writing weeks earlier. Who knows better how the lender communicates than one who has collaborated on transactions in the past? A good reason to consult your Realtor about choosing a lender.
- Availability: Those of you who have financed a home purchase know that throughout the escrow period, there are questions and concerns that can create anxiety for borrowers as they work toward leaving their current residence and moving to a new home. In this case, not only was the lender difficult to reach, he left on vacation without telling anyone, and with the file in shambles – 5 DAYS BEFORE THE SECOND OF EVENTUALLY THREE EXTENSIONS ON OUR CLOSING DATE!!! Timing is everything. Lenders who don’t answer their phones evenings and weekends care create needless stress. I have found that my commitment to being available to my clients does not create an increased work load for me. Clients are generally very respectful of my time, and if it’s something that can wait, they wait. If not, answering questions on a weekend or evening results in a more productive work week for everyone and a more enjoyable home buying experience. A good reason to consult your Realtor about choosing a lender is that he or she knows how available a lender will be.
- Experience with unique aspects of a home: The home my clients purchased had leased solar panels. While solar panels in general are a VERY good thing environmentally and economically, they present challenges in the mortgage world that MUST be addressed early in the process. Not doing so can result in a last-minute hiccup or even the death of a deal shortly before closing. As is typical, I notified the lender to ensure all the correct measures would be taken in a timely manner, and any irreconcilable issues would be identified early on. Despite that heads up, sure enough, an additional extension to our closing occurred because the lender did NOT take the appropriate measures. A lender who has worked with solar leases before, recommended by a Realtor, could have avoided this problem completely.
- Efficiency: Would you rather be told to get 5 or 6 items at one time, or continually feel you’re done collecting documents only to find out one more item is needed? And one more….and one more? A good lender will identify all of the items required to get the file through underwriting and request them all with plenty of time to spare.
- Honesty: Certainly there are times when a problem is unforeseen and unavoidable. Being told that the file is in underwriting and will be approved by the end of the day FOR 5 DAYS is incredibly frustrating for all parties involved….the buyer, the seller, the agents, the title company. The reality is that the closer you get to closing, the more the lender drives the time line. It is the lender that must get the documents completed and sent to the title company for the buyers to sign as a final step before closing. We are at the mercy of the lender to communicate honestly and often about what is happening with the file, and to set realistic expectations for everyone involved. Continuing to make promises that are impossible to keep only makes the situation worse. Consult your Realtor about choosing a lender will nearly guarantee that you will be dealt with fairly and honestly.
It’s not every day that you will be borrowing potentially hundreds of thousands of dollars. Understand that you are partnering with a lender to make your home ownership dreams come true. You should know plenty about whom you are entering a partnership with in terms of their integrity, experience, and ability to make the process as simple as possible. Full time agents work with lots of lenders. They know who can get the job done and who can’t. There are no “kickbacks” to a realtor when referring to a lender. Just knowledge of a lenders track-record and the ability to know who will give you the best chance of a successful and cost efficient closing.