How to Pick Your Lender

Buying a home can be a whirlwind process, and with so many things happening at once, the last thing you’d want to do is make it more complicated than it needs to be.  Since we’ve always advocated the importance of picking the the right real estate professionals to work with, we thought we’d share some hints to help you pick your lender, courtesy of the KCM blogging crew.

What type of company is it?

These days you can chose from a variety of institutions that offer lending services.

There are mortgage brokers, mortgage bankers and banks/credit unions. Mortgage brokers have been hamstrung by many of the recent regulatory changes and typically lack the actual ability to approve and/or lock a loan. Banks are usually limited in program choices and hamstrung by tighter underwriting. Mortgage bankers have the financial stability and direct lending capability of the bank coupled with the wide product menu and expertise of the mortgage broker. From a global perspective, I see mortgage bankers as a clear winner.

How does the company operate?

It’s important to work with a company that knows your area, is familiar with ins and outs of each neighborhood, and will employ affiliates (i.e. appraisers, loan processors, etc.) that are equally as knowledgeable about the local market.  Save yourself from headaches down the road and ask the questions upfront.

What about the individual loan officer?

Having a good relationship with your loan officer can become the biggest factor to a successful transaction.  How well do they education you about the process, the requirements, the factors that determine your approval or the interest rate you get?  The last thing you want is to have someone you don’t communicate well with guiding you through an already foreign process.  The KCM crew notes that, “This is difficult to determine on your own which is why the referral from another person who used them or your real estate agent has far more value than most people know (until it’s too late).”

Bottom Line?

Too many people stay focused on quoted rates and fees and neglect to see the whole picture of what is needed from a lender.  KCM’s advice? “Look for great communication, superior information and education, understanding of the local market and someone who looks at your application as something more than a number. Be prepared to pay a little more to get a better experience (even though it might not cost you any more)….in the long run, lowering stress can be more important.”


Why Picking the Right Agent is So Important

According to the Existing Sales Report issued two weeks ago by the National Association of Realtors (NAR), the percentage of cancelled contracts is on the rise.  NAR defined this alarming trend as: “Contract failures – cancellations caused largely by declined mortgage applications or failures in loan underwriting from appraised values coming in below the negotiated price.”

Only 9% of all contracts were canceled in August 2010.   In August 2011, a whopping 18% of all contracts were canceled.  In one short year, the percentage of canceled contracts doubled!

This issue only serves to highlight the importance that both buyers AND sellers take the time to pick the right real estate professionals that will be able to help you throughout the process with all of your real estate needs.

Buyers should make sure that their agent will not only be able to help find them the right home, but will be helpful and knowledgeable throughout the process, i.e. mortgage, title, escrow, etc.

Sellers should take note that now, more than ever, agents have to be able to sell your home twice:  first to a qualified buyer, and then to the bank by way of the appraiser. The second sale can be MUCH more challenging–coming up short here could potentially kill the deal.  However, the right agent will have no trouble selling your home during an appraisal.

The bottom line is that in the current housing market, there are too many things that can go wrong before and during the Escrow process.   Now, more than ever, it is absolutely crucial for sellers and buyers to use the right real estate professionals to guarantee that their deal will actually close.