Choosing a Lender, Part 1

Buyers tend to focus on interest rates to the exclusion of all else. They’ll carefully shop rates looking for an eighth of a point off here and a quarter off there and not pay any heed to the lender’s reputation. And even if the lender’s reputation doesn’t matter to the buyer, to the seller it can make the difference between accepting the buyer’s offer or rejecting it.

Ever hear of being penny-wise and pound-foolish? This is an area where buyers tend to be incredibly penny-wise. (Work with me, I’m tryin’ to be diplomatic here!)

Here’s what happens when a buyer calls a loan officer for a price quote:

  • the loan officer can make up any quote he wants — by the time the buyer locks in the rate, it’s going to be a different rate anyway.
  • the loan officer may quote a low rate, but neglect to mention the exhorbitant fees that go along with it — yep, those ubiquitous “junk fees”.
  • rates and points quoted may be too good to be true. In fact, if it is significantly different from other lenders for the same type of loan, it most likely is too good to be true. Lenders pretty much get their money from the same sources. Here’s something you may not know — most lenders don’t have money just sitting around to lend. They borrow it, same as you are doing. They just pay wholesale, while you’re paying retail.

So what does make a difference when shopping for a loan?  Reputation.

A reputation that says, give me your loan and I’ll do what I said. We’ll settle on time. You’ll know your costs in advance. If a problem arises, we’ll discuss it right away, so you can make smart decisions.

And if you think this reputation doesn’t make a difference when submitting your offer to a seller, you’re nuts. Even if the seller has never heard of the loan officer or the company, it’s a good bet that the real estate agents knows.  And if two offers are equal, the one with the better loan officer is going to win.

I can’t tell you how many times I’ve had a real estate agent tell me that my buyer’s offer was accepted because the agent knew the loan officer would perform as advertised in the pre-approval letter. The seller is counting on that sale going through, and probably is counting on receiving his funds by a certain date. Especially if he has another purchase that can’t happen until yours goes to settlement.

I’m lucky. I know several loan officers that perform head-and-shoulders above the crowd. David Calkins, with Presidential Bank, is tops. So is Tim Moylan with Chase Mortgage. I probably know three or four others that I would recommend in a heartbeat and would use myself, if the need ever arises. (Click here for their contact information.)

What do they have in common? A commitment to doing the right thing. They charge fair rates and fees. They don’t dazzle with fancy words and empty promises, they deliver.

And it’s not about promising to buy a house, is it? It’s about actually going to settlement and buying the danged thing, right? And being able to move in when you planned, without pulling your hair out. It’s about being able to sit across the table from the sellers and having them tell you all about your neighbors and when trash day is and who’s a good babysitter or dog-walker, instead of a disgruntled silence because you’re settling days later than you thought and it’s costing everyone more than that eighth of a percent that you saved up front.

© 2007 Susan Pruden

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