When making such an important purchase as buying a home, it is important to choose a lender that is local and known to you or your agent. Please don’t choose a mortgage company, bank or credit union you haven’t heard of or done business with or that your agent has never heard of or done business with. In particular, don’t choose a lender from the opposite side of the state from which you are buying that isn’t familiar with loan programs for the area you chose or isn’t familiar with values. Why is that important? Well if the lender is from an area that is urban and is only familiar with Conventional or FHA financing and you are buying in an area and are qualified for a Rural Development loan, that lender may not know all of the conditions that need to be met both for the Buyer and for the home. If the lender is not from the area, he or she may not care as much if they do a good job because chances are they are not looking for more business in that area and so they may not care as much if they do well. They aren’t worried about reputation or repeat business because it is too far away to market to. Now there are lenders who will write loans in areas not close to them who do a great job but you better know your lender very well, is what I think it comes down to. Someone you know or someone that came highly recommended to you by someone who had a great experience with them. It doesn’t always guarantee the same outcome but at least someone can give an idea of that person’s knowledge and professionalism and it is better than hiring blind.
It is important for a lender to know values and be familiar with the home prices in the areas you are shopping in. Together with your agent, they can better serve you and protect you if they are more knowledgeable. They know what things are worth and would appraise for, what options you have for financing, how much closing costs you can safely request to land that offer acceptance by a Seller or offer more ideas to help you land that house.
Your lender should be communicative. You know they are doing what they should be when they keep in contact with you at least on a weekly basis as you go through the buying process. You should be kept informed as things progress. There should not be periods where weeks go by and you are not getting an update. Ask your lender or agent for a timeline of how the loan will progress to help you keep track of it and the lender. Even difficult government subsidized programs shouldn’t take more than 60 days to close in a normal situation, it should be more like 45, unless there are reasons for it such as delays due to repairs being made. You should be able to talk face to face with your lender if need be. They should be available to you when you need them.
It is always important to shop around for lenders just like shopping for a home. Compare the Annual Percentage Rates (APR) as well as the interest rate. These are not the same things. The APR includes the costs of the loan. While an interest rate may be less, the APR can be significantly more so that means higher fees.
So ask your Realtor®, friends and relatives. Check out social media and Google. Many have pages and those have reviews. Talk to a few different lenders. Choose the one you connect with, who seems to have your best interest at heart, the one who takes the time to know your needs and situation. Like anything else important in life, do your diligence to make sure you are making the best choice in lenders.
August 23rd 2019