What You Should Know About Choosing a Mortgage Lender

How to Choose a Mortgage Lender

If you are on the hunt for a house and in need of a mortgage, you have likely encountered repeated advice stressing the significance of choosing a local lender.

Purchasing a home is typically one of the most significant investments individuals make in their lifetime.

Beyond securing a favorable interest rate, selecting the right mortgage lender entails finding one that is accessible and prioritizes your best interests.

In today's competitive housing market, the likelihood of encountering multiple offers similar to yours is significant.

The difference between coming in first, versus landing in second or third often hinges not only on the lender's credibility but also on which lender answers their phone when the listing agent makes verification calls.
Don't risk losing your chance because you have entrusted your finances to a lender that operates Monday through Friday 9am to 5pm.

Even if you are an experienced buyer, there are many advantages to choosing a local lender. Despite your familiarity with the process, unexpected challenges can arise.

Local lenders recognize the individuality of each customer and are dedicated to finding tailored solutions for all. They are committed to going above and beyond to ensure their clients secure a successful mortgage.

In general, local lenders are preferred by sellers and their agents due to their reputation for smooth and timely closings. This is particularly crucial in competitive scenarios with multiple offers.
Previous negative encounters with large banks or online lenders may influence sellers or their agent. Having a trusted local lender could be the deciding factor in your favor.

#1 Recommendation – Strongly consider using a lender your agent has experience with. This will help ensure a smooth closing and a great loan product/rate. Agents are prohibited, by law, from receiving referral fees from lenders - they receive peace-of-mind for their clients success.

Below are 9 compelling reasons, along with background information, explaining why having a local mortgage lender on your side enhances your competitiveness in today's housing market:

By leveraging these benefits, you can increase your competitiveness and position yourself for success in securing your dream home.

From the beginning, a local lender will help you avoid unexpected surprises

1. They are easy to get in touch with – and in a fast-paced market easy access to communicate with your lender is essential.

They are generally available during evenings and weekends, ensuring prompt issuance of pre-approval letters and seamless coordination with calls to listing agents on your behalf.

If you prefer, meeting your lender face-to-face is a breeze. You will have the convenience of having a dedicated cell number for instant calls or texts, ensuring your queries are addressed promptly, avoiding the frustration of waiting days for a response.
When you work with a local lender, you can expect to talk with the same person whenever you call or have a meeting.

2. Have a trusted reputation - Local lenders have established strong connections with numerous real estate agents, fostering personal relationships and a track record of successful closings and effective problem-solving.

When the listing agent of your desired property is familiar with your lender and their reputation for reliability, it elevates your offer above others in the competition.
The listing agent will advocate for your lender to the sellers, instilling confidence that the transaction will proceed smoothly to closing.
Furthermore, local lenders and real estate agents share a mutual interest in delivering exceptional service, recognizing that satisfied clients are likely to provide valuable referrals for future business.
They understand that whether the experience is positive or negative, word-of-mouth recommendations will influence the decisions of friends and relatives.

3. Closing costs are usually lower with a local lender - Large national lenders, and banks, have significantly higher overhead costs and the presence of additional fees often results in higher overall costs. When using a local lender, typically the closing costs on your loan will be much lower.

The cost of money for home loans can be likened to a commodity – gasoline is a commodity. If you drive down the street most stations have identical gas prices. Gas prices and interest rates are constantly changing, up and down throughout the day.
Comparing lenders solely based on rates can be challenging, as some lenders may quote lower rates that are not currently available, knowing it will be some time before you actually have an accepted offer.
Given the competitiveness of rates across lenders, it is crucial to prioritize experience and reliability to ensure timely closings.

4. Local lenders oversee your file from inception to completion - offering personalized attention throughout the process.

Unlike large corporations where you are just another file among many, local lenders are committed to ensuring your loan reaches closing on time. They collaborate closely with underwriters and processors every step of the way.

In contrast, larger institutions often delegate various aspects of the transaction to different departments – sometimes in different states, leading to potential delays and communication breakdowns.

With local lenders, a more streamlined approach is employed, with one or two individuals managing the entire transaction, ensuring comprehensive oversight and smoother communication channels.

5. Local lenders know the market and appraisers - A key advantage of working with a local lender is their deep understanding of the local market, enabling them to use an appraiser familiar with your area.

Consequently, the appraisal value is likely to be more accurate compared to assessments by national appraisers, who may lack insight into the distinctions between smaller towns within a larger metropolitan area.

6. Smaller lenders can close loans quicker - Given the current intense competition, closing within a mere 15 days can sometimes significantly bolster your chances of offer acceptance. If you have received preliminary underwriting approval, you can offer a faster closing to the seller if this works with your desired timeline.

7. Local lenders offer more innovative loan options tailored to diverse needs - expanding accessibility to a wider demographic.

These options cater to self-employed individuals, those with less than two years of filed tax returns, medical professionals, clients with lower credit scores, and buyers seeking jumbo loans or jumbo loans with low down payments.
Notably, they enable more individuals to purchase their next home without selling their current one, eliminating contingencies, the need for multiple moves, or short-term rental hassles.

8. Local lenders excel in handling loan issues - If difficulties arise, they demonstrate a remarkable ability to find effective solutions.

9. Local lenders alleviate the stress of both buyers and sellers - The closing of a new home holds immense significance, impacting families, scheduled moving arrangements, and potentially school changes for children

With local lenders, swift responses, on-time closings, and reassuring resolutions to concerns provide much-needed relief throughout the process.

STEP 7: Get Pre-Approved for a Mortgage Loan