Awesome! You've decided to buy a house, went online to flybynighthomeloansforyou.com and got pre-approved for a loan. Now you're ready to find your new dream home!!! Congrats! Welcome to home ownership, but hold on second...
You would actually be surprised at all the problems that can arise during a home purchase and MANY times those problems can happen on the financing end, especially with out-of-town lenders and online only lenders. Don't believe me? Here's a couple of true stories:
- We had a seller who wanted accept an offer from a buyer. The problem though, the buyer already had an FHA loan on a property in Belton, TX. That buyer went through an online lender and got approved. You see, you can only have one FHA loan at a time (and only on your principal residence). The offer they submitted was based on another FHA loan and we asked the buyer's agent how they're going to get FHA financing for this house when the already have an FHA loan in their name. The agent directed us to their lender (flybynighthomeloansforyou.com)... we talked to the loan officer and he assured us it was all good. We told the seller what was going on. We suggested they don't take the offer conditional on FHA financing because we knew a buyer couldn't have multiple FHA loans. The went against our best judgment and accepted the loans. Yep, you guess it, the deal fell apart 2 days before closing because the buyer couldn't have 2 FHA loans... the seller's had already moved out!!
- We had a buyer who was with a huge national lender. We sent them to a local lender. After meeting with our local lender, they decided to go with the "big guys". Well you guessed, it the estimated closing costs that this national chain initially gave him was magically increasing. Oh, and the loan the type of loan he trying to obtain was going to have to change (what our local lender told him that he should do, to begin with). He got so frustrated, he just backed out the deal.
- Another time we had a buyer who was approved with an online lender. Of course, "pre-approved" means "pre-qualified" (big difference). After my buyer had paid for an option period, home inspections and appraisal, the lender informed us that they wouldn't be able to get him a loan. Apparently, that online lender didn't bother to run their credit when they "pre-qualified" them!
I could go on all day about stories like these. Here's the truth on why you want to use a LOCAL referred lender:
- Many times, these out-of-town (and especially) online lenders play the "percentage game". Meaning, they know that a certain percentage of home loans won't close at all, so they try to get as many loan apps as possible because of those percentages. Many times, they are so busy "pre-qualify" people, that they don't stop and actually do the homework necessary on behalf of the buyer. They're too busy moving onto the next borrower.
- The local guys are typically smaller, they care about their reputations because they don't have as many loan apps. They take the time to sit with the borrower, talk about their goals, their expectations and specific situations.
- The local lenders know that referrals are the lifeblood of their business. Since they don't have big marketing budgets to advertise on billboards, national TV shows and networks, massive mail out campaigns, etc... they rely on word-of-mouth and referrals from past clients. If they do one person a great job, that person may tell their friend who decides to buy a home
- The local guys also have strong relationships with Realtors in the community. They know keeping an open line of communication with the buyer's real estate agent is a MUST. As a matter of fact, when have a situation or question, we can pick up our phone call the lender and typically get it handled pretty quick. With the faceless big guys or internet guys, we as Realtors, don't have that important relationship with that lender. We've even had to call a lender on Fathers Day because a new buyer wanted to submit an offer. He worked on Fathers Day to get the buyer the best rate possible. I wouldn't have been able to call the big banks on Father's Day (let alone on a Sunday, for that matter) and get that same service for my buyer.
If you're shopping for a home and need to get financing, it may be in your interest to shop around to LOCAL lenders. Many times, what rates are quoted on the internet, isn't necessarily what you'll end you up with.
Don't know which local lender to call?? Send us a message and we'll be glad to give you several names!