I like to tell this story about how lenders work. Women obviously get this a bit better than men so there is also a motorcycle version…
Say for example, I wanted to invest in a purse and started researching a Louis Vuitton. I could go right to the Louis Vuitton store at Tysons Galleria. The store is only available during business hours and while the staff is attentive, they probably can’t offer a whole lot of insight about Prada, Celine or any of the other purses I might be considering. Also notable about this experience, I’ll be paying full price with a very limited selection. There’s no negotiation here.
Another option is to buy a Louis Vuitton from Macy’s or Nordstrom. Here I have other options like Dior, Chanel and Burberry. The staff is still knowledgable about the product and occasionally they’ll offer discounts on certain bags so I can get a great price on exactly what I want without a compromise to service.
The last option would be eBay. “I know what I want and I don’t need help so I’ll download the app, push a button and await delivery – hoping that it’s authentic.”
This is the difference between big banks (Wells Fargo, Bank of America) and mortgage brokers (Caliber, George Mason, Intercoastal) and online banks (QuickenLoans, LendingTree). Regardless of whom buyers decide to give business to, the process is out of my hands. If there’s a problem, a mistake or something that needs to be pushed through until resolved, I can’t ask for more time and attention from people that I don’t know and trust. Big banks are notorious for being slow, expensive, inflexible and generally disconnected. They certainly aren’t going to remember you at the holidays.
So when shopping for lenders, remember a few things.
1. You can’t lock a rate if you don’t have a ratified contract.
If one lender is offering you a great rate on Tuesday, don’t think those terms will still be available when you’re ready to go. Rates change everyday. In fact, a lot of those rates are teasers and they aren’t showing you the points or fees to get that rate. It’s best to find someone that you trust – great communication skills, will take the time to explain the options and counsel you through the process, just like we will.
2. A lender can’t offer a rate and terms until you’ve made a full application and they’ve assessed your credit report.
Everything is subject to review and the other part of the scenario is factoring in the purchase price, taxes, insurance and fees on the properties you’re shopping for. As you can see – there are too many variables to compare just the rates.
3. A good lender will ask for all of your documentation up front.
I know, this is a tough one. I have clients that say they’re not ready to buy. Then they find an amazing house and it advances their timeline but they haven’t been through the pre-qualification process yet. A good lender will be available when you need them; nights, weekends, early mornings and holidays – just like us. So you call or go online and submit your mortgage application. Then the lender starts asking for tax returns and pay stubs – whoa, wait, you’re not prepared for all that??!?! So you call someone else or download an app and you’ve got the letter that you need in 20 minutes. STOP, THIS IS A RED FLAG! If the lender isn’t asking all these questions then they’re not getting all the information. If they don’t get all the information, you’ll likely miss something that will result is unnecessary stress 72 hours prior to closing (when the underwriter rejects your loan) or you end up being completely denied and potentially forfeiting your deposit, not to mention losing your dream home and possibly being sued!! Need I say more?
We take great care in recommending lenders. These are professionals with whom we have done multiple transactions and seen in action. You have a choice and we’re in a position to earn your business. The best way to approach it is to talk to several lenders and be consistent about the questions you ask, which is also something we can help with!