Who is the Most Important Person in Your Home Purchase (hint: it’s not you and it’s not your Realtor)?

Westcoe Realtors, Riverside California…Catchy title to today’s blog, eh?  But in reality, it let’s us discuss one of the most important and yet overlooked parts of your real estate purchase….your choice of who will handle your new loan.  Yes, your lender is by far the most important player in your transaction. 

Ok…we get it that without you as the buyer, there would be no loan necessary, but we are trying to make a point here, and that point is simply this:  Your lender better be professional, up to speed with all the massive changes that take place in the loan world daily, and most of all, they better be able to deliver what they promise.  If not, it’s goodbye home ownership, and hello rental.

The loan world today is a complete and total mess.  In the “good old days” (make up you own definition for that), getting a loan was as easy a chatting with Banker Bob, filling out some forms, and getting the loan for your home.  Alas, that process has gone the way of Malt Shops and flattop haircuts.  Now, the paperwork alone kills at least 3 trees, and the amount of loan programs that you have to choose from requires a skilled loan professional to navigate the ever-changing waters.

So how do you tell if you are getting a really good loan professional?  Here’s a few tips…and understand that before we begin, Westcoe Realtors has no lending branch with our office, or any other type of financial relationship with any lender.  We are neutral…Switzerland, and are only interested in what is best for you.  So what follows is based upon our experience, not our pocketbook.

First, stay away from the internet in picking your new lender.  Most internet based lenders have figured out that potential internet customers are interested in only one thing…the interest rate….and while that is naturally important, the interest rate is only as good as the ability of the lender to deliver it at closing.  Our experience is that since internet lenders know buyers shop interest rates solely, the “promised” rate can many times change near the close of escrow…and by then, the buyer will lose the house if they don’t close, so they wind up getting a higher interest rate than expected.  So…beware of promised rates that are lower than everyone else.  There may be more to the story.

Secondly, interest rates are important, but do not ignore the costs.  Understand that loan offerings are a combonation of costs and interest rates.  For example, today’s fixed 30 year interest on a loan would be near 4.75%, with minimal costs….but you can also obtain a 3.5% rate if you want…but it will cost you a lot more to get it.  It is all a formula that lenders can use, and the bottom line is that you can pay them a lot of money now to get a lower rate, or a little money now for a higher rate.  The choice is yours, but just understand that costs go with rates…and you need to understand the costs involved with any loan.

Next, it is generally better to use someone you know, or are referred to, than someone you don’t.  Since there is so many differences between lenders and lender programs, your best bet is to always use an individual that has a vested interest in keeping you happy.  Let’s face it…there is a big difference between someone who will have to continually see you if they break their promises to you regarding your loan, than with a person who will never be a part of your world once the transaction is over.  That doesn’t mean you ignore the rate and costs mentioned above, but all things being equal, a known or referred lender will trump an unknown most every time.

Lastly, trust your instincts.  If you meet with your lender and do not get a good feeling when you are done, walk away and find a new one.  The beginning of your loan process is like a honeymoon…things should be all peaches and cream…but if your cream smells sour, the rest of the process will not generally get any better.  Your lender should take all the time needed to answer all of your questions, and if they don’t, or are in too big of a hurry, or like using all of their lender buzzwords to impress you, or are vague about the costs, or say things like “trust me” without anything in writing, or cannot give you a list of past satisfied customers, etc…then run Forest run.  Ask the other professionals in your life (attorney, accountant, Realtor, escrow professional, etc)…they will all have someone they trust to help you.

If you are represented by a Realtor in your purchase transaction, usually they have formed relationships with lenders because they have discovered the lenders with the best service, rates, and costs.  They have done your shopping for you.  You don’t have to use them, but if you trust your Realtor (and you should, or why are you using them?), then you can generally trust their lender.  However, as we said earlier, the choice is yours.

Sometimes we have clients who have come from a previous relationship with a Realtor in which the agent was also the lender, or the Realty company also had a lender branch of the company, and these clients are wary of the relationships.  Guess what…they should be.  Westcoe does not have a lending arm to our corporation, or allow our agents to be loan reps for a reason…We do not feel one size fits all!  It is our humble opinion that lenders should stick to lending (too complicated to do on a part time basis), and Realtors should stick to real estate (again, too complicated to do on a part time basis).  

Also, most Realtors have at least 2 lenders they recommend because we know that one lender cannot offer all the programs that may be best suited for a particular buyer.  We need choices…and many times a real estate lending branch cannot offer all the choices necessary.  Those real estate companies that have a lending arm will tout the “one-stop shopping” theory as a way to make it easier for their clients, but we don’t subscribe to that thought process.   It is a matter of choice, but we do not see how a small, real estate company can truly compete with the direct lending banks for loan rates, costs, or programs.

In the end, all we want you to understand is the vital importance a lender plays in your real estate purchase.  Hopefully, your loan process will go smoothly, and you will get the loan you want, at the rate and costs you expect, from someone who provided you with good service to get it all done.  Those people are out there, you just need to find them…and if you are having trouble, call us.  We’ll give you our best recommendations…remember…we’re Switzerland on this issue, but we are glad to help.