Many clients ask whether they should work with multiple lenders when planning on purchasing a home. My advice is that, like most do with real estate agents, interview a handful but choose to be loyal to and work with one throughout the process.
Speed
The reality of the market in the East Bay is that the strength of your lender impacts the strength the offers you make on properties. A strong lender can make the difference between acceptance and not. This is because the lender is the primary factor in how long it takes to close. For most sellers, time is money and thus the shorter the closing time the better. Many of our reputable local lenders can close in as few as 14 days, making your offer almost as good as cash when it comes to timing.
Local Reputation
In a market where the sales prices can be hundreds of thousands of dollars above the list price, the lender’s understanding of local market conditions and the use of local appraisers is key. Additionally, lenders having a reputation for closing challenging deals locally helps your offers because listing agents and sellers are more likely to work with a buyer using a lender with a proven track record.
Customer Service
Spending some time for due diligence on several lenders also gives you insight into their customer service. Some things to watch out for are responsiveness, willingness to answer all your questions, and ability to match you with niche products according to your situation.
Niche Products
While most lenders have access to largely the same pool of loan products (conventional and FHA), some lenders specialize in outside-the-box financing. For example, not every lender can lend to self-employed individuals that haven’t shown their self-employment income on two tax returns. Products are also available to those with poor credit scores, recent bankruptcies, and other less common scenarios.
Rates
I’m not a fan of shopping around for the lowest rate. In my opinion, the qualities above are far more important than securing the lowest rate possible. Yet great rates shouldn’t be ignored as a lower rate can add up to thousands of dollars over the life of the loan.
When comparing rates, it’s important to be comparing apples to apples. This means looking not just at the interest rates, but also origination fees, underwriting fees, points, and other fees that ultimately impact the cost of the loan. The easiest way to compare is to ask each lender for their ‘no-points, no-fees’ interest rate.
Conclusion
Interested in shopping around for the best lender? Go for it! We’re also happy to save you time and help narrow down your choices as well. We’ve worked with many handfuls of lenders and are happy to recommend our favorites. Get in touch!
