If I had to pick one topic in the world of real estate that is most consistently misunderstood, selecting a lender would be it. Simply put, there is a LOT more to selecting a lender than just obtaining the lowest interest rate and or the lowest mortgage payment. Here is why you should select your lender very carefully: Because when you make an offer, next to the price you are offering, concerns over your financial wherewithal are paramount in both the eyes of the seller and the listing agent (offering a great price is somewhat meaningless if the seller or the listing agent are fearful of dealing with a fly by night lender) Because using a lesser lender may put you at a disadvantage if you find yourself competing for a property against another prospective purchaser that is working with a more reputable lender Because I see many transactions made more difficult than necessary because of lender incompetence. I have seen the following instances of such ineptitude recently: o A closing deferred at the last minute because the funding did not arrive in time for the closing, AFTER the lender had repeatedly assured all parties involved that this would not happen and that there would be no problems with the loan o A purchaser charged dramatically more for closing costs than the lender had disclosed on the government-mandated Good Faith Estimate o A lender that could not adequately summarize the mortgage-related costs for a client that needed to bring those funds to a closing that afternoon o A lender that literally stopped returning phone calls rather than admit their inability to provide financing o Several lenders not being able to provide final numbers until literally the day of the closing (very common, and one of the surest indications that the lender is not competent) o Lenders changing the interest rate and not telling the borrower until the closing was in process o Lenders simply not doing their jobs in a timely fashion, resulting in deferrals of otherwise routine transactions o A lender that could not be reached the day of a closing when a last minute issue arose because he was at a professional golf tournament o Mega lenders that turn their clients over to their assistants after one interaction with a client Because there are no licensing requirements for loan officers (there are for the companies themselves, but not for the individuals that originate the loans). According, there is virtually no barrier to entry. You or I could literally be originating loans tomorrow if we wanted to. Given that mortgage origination can be very lucrative, there has been a huge influx of people into this industry in recent years. The end result is an overall degradation in the quality of service provided (this is the same formula that is destroying real estate: low/no barrier to entry, potentially large incomes, and brokers that employ an any warm body will do business philosophy) Because the most common end result of lender incompetence is a high-stress, high-emotion, last minute deferral of your closing, and this can put you in an out-of-contract situation that could be dangerous for you. What I mean by this is that virtually every real estate contract has various deadlines that are specifically negotiated between buyer and seller. The most important one is the deadline for successfully closing the transaction. Usually, this deadline represents the approximate date at which the purchaser believes they can be in position to close. That decision is based first and foremost on when the lender says that can have final loan approval. If the lender does not provide that loan approval in a timely fashion as promised, this can put you in the awkward position of having to request that the seller agree to defer the closing. The seller is NOT required to grant this extension. Legally, the seller could literally void the transaction or, worse yet, declare a forfeiture and attempt to retain your deposit I hope this open your eyes a little to this very important issue. Do your homework and find a quality lender. It absolutely, positively matters! Read more about this topic on the Professional One Real Estate website. |
