Working with the right lender is crucial! Please do not be fooled by the teaser rates available on a poster in your local bank. Those are not accurate rates. Your bank will likely be able to give you an excellent rate for your loan. However, you may lose out on your dream home, if you choose to use your bank when purchasing.
Banks get a bad wrap when it comes to purchasing a home loan, and for good reason. The biggest difference is that the lender that you’re working with at a bank is not the person that is handling your deal. They are paid by the hour to get as many loan applications over to their underwriting center (which is not local) as they can. You are just a number. The banks also has low wage underwriters, located in another state, that oversee all states. Often times we will get denials over an issue that is NOT an issue here in Arizona. For example, some states require hurricane straps on a water heater. Not a problem here, but you do not want your loan held up and pay an extra appraisal fee, to have someone go back out to ensure that proper hurricane strapping is done. Also, good luck getting the seller to do that for you.
Mortgage lenders (the right one) will have a hands on approach to your file, they will ensure that the loan is done completely, the process goes smoothly and issues are addressed immediately. They are paid, based on your loan getting done… not hourly. When it comes to rates, they will be highly competitive across the board, however most people will doubt this since most lenders will semi underwrite your file before they even give you a number on rate. They don’t want to be wrong and would rather error on the side of high rather than low. Banks will take the opposite, but like I said, you’re just a number to the bank. Get the apps in, make them look good, move on.
So how do you know you’re working with a good lender? Ask them a few questions.
- How long have you been doing this? You want someone with experience. Sorry, new lenders. But you want someone that will spot issues from past experience and address them before they get anywhere.
- Do you review every document before passing it on to the processor? Sometimes the wrong document gets sent over by mistake, we’re all human. However, some documents do NOT belong in the wrong hands. Make sure they will review everything before submitting to the next phase.
- Where is your underwriter located? You want them close, as in, “upstairs”, or “30′ from my office”. NOT, “in Texas”.
- What is your relationship with the processor and underwriter? Do they have a designated team that they know, work closely with, and get stuff done… or does it go into a ‘pool’ and it’s all about the luck of the draw?
- How long has your underwriter been working with you? I cannot express experience enough. The more experience (which may not relate to time in business btw) the better equipped they will be to handle potential issues, as they come up.
- Is your appraisal management process quick and efficient? You want to make sure that they have quality appraisers, and that appraisals are handled well, and quickly. Appraisals that delay close, can cost you money. Also, when an appraisal comes back low, or incorrect, you want to make sure that the lender has SOME resolves, as in a good appraisal manager in house.
- What is your average turn around? When all the docs are reviewed and approved up front, the loan goes a little smoother and quicker. This will be determined by how well the lender does his job before submitting to underwriting… and also how quick you are with your fetching of the things.
- Does your company follow Freddie (Mac) and Fannie (Mae) guidelines, or do they bloat them with overlays? Did I just lose you there? Most loan originators (LO’s) will put your information through a system called Desktop Underwriting (DU). This will come back and say whether you are approved, contingent on verifying the information (via pay stubs, taxes etc) or whether they need more information, to go to a manual approval. However, some lenders will also add “Overlays” to their approval, to ensure that the loan is “Totally safe” for them to sell to the secondary market. Some overlays are ok, but too many can kill your dreams for your new home closing… Aka, Banks.
- Do you table fund? This means that they can get funds over to title in order to close the transaction, prior to having all those wet signatures documents, live in their hands. If you can sign, fund and close on the same day, this COULD make a difference in everyone’s stress level if we come down to the wire.
Once you have asked the questions, talk to that lender. I’m truly a believer that every relationship should be based on a certain level of ‘gut feeling’. This is a person that will scrutinize your financial life. Being truly comfortable with them is a plus.
After all is said and done, the most important ending is to make sure that your lender and your agent work together, well. In my case, I want my lenders to be within choking distance. I want to know that if I need a rush, they will rush. If I need documents or questions answered, I want to be able to email, text and/or call them and get answers… and I don’t clock out at 5pm. Buying a home is all about the big picture, and there are several areas that need to be overseen… That’s my job, to ensure that the WHOLE thing is coming together and delays or hurdles are seen to up front, not when it’s too late.