Choosing the Right Lender- It is About More Than Just "Numbers"

I am a creature of habit. I HATE change. I have neither the time nor the patience for it. So, when my favorite lender, whom I adore both personally and professionally, broke the news to me that she was retiring I was flooded with a mix of shock, sadness, and then sheer panic.

“What about ME? What about my clients?!” I blurted out before I had time to think about what I was saying. Tears almost came out of my eyes. After several minutes of reassurance from her- my selfishness subsided and I was able to be happy for her- after all, she deserves it after decades of being the hardest working woman in real estate (I know that sounds like hyperbole, but if you know her like I do you know it’s true).

So here I am- being the opposite of a “change agent” left wondering what I am going to do the next time I need to refer someone to a lender. I have never really been one to “share the love” when it comes to referrals- like I said- I hate change, so when I found someone that worked the way I did I stuck with her exclusively. For YEARS. Granted, I am exposed to other lenders when I am the listing agent and represent the seller but most of those experiences left me being smugly satisfied I had her in my corner as opposed to being impressed by the buyers lender. 

All this turmoil has forced me to evaluate how I would pick a good lender- so I guess I need to take my own advice. I figured this would be a good opportunity to pass along to you what is important to me in a good lender. Keep in mind these points go beyond choosing a lender based rates and fees- those are easy to evaluate. There are many more intangibles that can make a lender good or bad.

1.       Is lending their full time job? If not- run. They shouldn’t also sell real estate or do property management or work at some other full time job. You need someone to be dedicated to the job you’re hiring them for so you get the highest level of knowledge and service possible.

2.       Are they local? If not- find someone local. Yes, we live in a digital age and most everything can be done electronically, but frankly out of area lenders rarely do a good job. Not only do they not have any interest in impressing the agents (because there is no chance of repeat/referral business) they do not have their finger on the pulse of the local market and coinciding potential appraisal pitfalls.

3.       Are they too busy to talk to you? If the first several times you deal with them they are not readily available, or they do not return phone calls or emails and you constantly have to chase them down take that as a sign and RUN in the opposite direction. It will not get any better.

4.       Does your real estate agent recommend them? If you are working with an agent that has been around for a while there is a good possibility that they may know or know of your lender. An honest agent will tell you if your lender’s reputation precedes them (either positively or negatively).

5.       Do they understand your situation? If they “preapprove” you over the phone without seeing your credit, income or asset documentation you should be worried. Underwriting guidelines change almost daily these days- so if you have even a slightly unique financial situation it is IMPERATIVE that they take the time BEFORE you are in escrow to fully evaluate your situation so you know if your loan will make it through underwriting. After you have put down a deposit, paid for the appraisal and inspections is not the time to find out your lender overlooked the fact that a past credit blemish or odd source of income will kill your deal.

6.       Do you feel comfortable with them? If you don’t, you should listen to your gut. Getting a mortgage is not like buying a car so you should not assume that it is normal for your lender to be unprofessional, dishonest, fast-talking or swarthy. They should be up-front with you about rates and fees. They should be able to quote you a rate after seeing your financials, at which time they should also quote you their fees. As a side note- a truth in lending statement is a better comparison tool than a good faith estimate, but we’ll save that for another blog post. If you feel instinctively that they are giving you bad advice- they probably are. Listen to yourself and get a second (qualified) opinion.

7.       Are they willing to answer the hard questions? A good lender will take the time to answer all of your questions- no matter the quantity or difficulty. They will also take the time to educate you on the entire process you are going through. Once thing I encounter a lot with buyers on my listings is they get frustrated with their lenders when they are left in the dark about what is happening with their loan and the lender won’t return their phone calls.

The bottom line is this: getting a loan for a home is a big deal. Do your homework, ask around (to people who know what they’re talking about) and make sure you FEEL COMFORTABLE with the person you choose to work with.

In the meantime I have found someone to step into the place of someone who I once felt was irreplaceable, so if you need a referral to a local lender- don’t hesitate to give me a call!