One of the most important steps in purchasing a home is finding the right lender. Thinking over the last few transactions I have had, and the conversations I have had with buyers about lenders made me want to write this blog. Buyers are often new to the whole process and really don’t understand the importance of a good lender.
My first question to a buyer is, are you preapproved? Often the response I get is no, but I was going to talk with my bank. Okay, that’s fine I say. What bank are you using? Do you know anyone that has had a successful closing or purchase with your bank? At this point I am sure the buyer is thinking, well I have my savings account there. I haven’t had issues putting money in and taking it out. I am sure the bank can help me get a loan for a house.
If only it were that simple, right? As an experienced agent I have stories I could tell, as I am sure most agents can, about the closing that didn’t happen because of the lender or the preapproval that wasn’t worth the ink printed on it. It’s my job to educate buyers about this process. I am the guide, the negotiator, the coordinator to get those buyers into the home of their dreams. I want the buyer to have the best transaction they could and close on the home of their dreams.
So if you are a buyer what should you look for in a lender? First off, I would say get referrals. Ask your agent, your parents, your friends who they used and if they were happy. Did the home sale close on time, did they have hiccups along the way, if they had hiccups, was the lender able to help them through it, was the lender available to talk with them and answer questions in a timely manner? I personally like local lenders. I want to be able talk in person to the person who is going to play a major role in home buying process.
Once you have a couple of lenders that you were referred to. Next step is to find out what kind of products do they have. What kind of loan best suits your needs? There are FHA, VA, Wheda, conventional, arm or in house loans. Find out what they have and how they work. Research if they are the best fit for you? What are closing costs for that lender? I have found rates are usually so close that I wouldn’t suggest picking a lender based on that. Each lender advertises their rates a little differently. So what you think is the lowest rate, might be, but are you paying money (points) to bring down the rate. Do you have money to do that? You might want to check to see if grants are available to help you with your down payment. There is so much that goes into finding the right loan. If this seems overwhelming there are lenders and organizations that offer first time buyer classes. These classes often address other topics including owning a home, what to expect for maintenance, home inspections, refinancing etc. Take a class. The more you know the better.