Show Me The Money!

Written by Sam Abukarroum | February 19, 2019

So, you’ve decided to buy a house. Congratulations, that is a huge step! However, and I hate to say this, that was the easy part. If you’re like many potential buyers, and I speak with literally tens of them each day, the next question is “where do I start?” Well, I’m glad you asked. 🙂 Keep reading to find out.

Knowing which piece in the puzzle to move first is critical. You start going to open houses to see what’s available on the market. While engaging in a conversation, the hosting broker at the open house asks, “Have you spoken with a lender? Are you pre-approved? Is this within your price range?” Are you prepared to answer these questions?

The next thought is how do you find a good lender? Not only that but also, what makes a lender “good?”

Accessibility: In the age of the internet and cell phones, having to drive to the lender location to complete paperwork or for a discussion can be very inconvenient, if not prohibitive. Can you complete the loan application over the internet? Are they available if something comes up with the loan?

Closing: How long does it take them to process your loan papers and fund the loan? Typically, a period of 25-30 days is ideal. How often have they failed to close on the specified date?

Programs and fees: What variety of lending programs do they offer? Conventional, FHA, VA. What’s their down payment requirements? If you’re interested in taking advantage of any financial assistance programs, finding a lender that is certified to offer such programs is crucial. What are their fees?

Personality: This is tough to explain, but comes down to how patient are they in explaining lending terms? Do they speak down to you? Are they treating you like a relationship or just another transaction!

The other aspect of finding a lender is determining the type that works best for your needs. These days there are a number of available options:

Banks: If you like to keep all your financial transactions in one place this is a great option. Besides, you already have the relationship established by having a checking or saving account there. However, banks might take longer to process and fund your loan. Check with them. Additionally, they may not offer government-backed loans (for example, FHA, VA, or USDA home loans).
Credit unions: The same applied here if you want to your lender to be the where you do your banking. Credit unions usually offer loans only to their members. So, if you’re already a member it might be a good option. Additionally, they may have lower costs and interest rates, but like banks, they may take longer to close. In addition, like banks, they may not offer government-backed loans.
Mortgage lenders: They only exist to offer real estate loans. They vary from nation-wide names to local ones. Most of them can process and fund the loan in-house. This has the advantage of being able to close in relatively short period, 21 days is sometimes possible. One thing to keep in mind, their rates and fees might be a little higher than banks and credit unions.
Mortgage brokers: This is your shopping around option. Like insurance brokers, who shop around for the best insurance option that meets your needs, mortgage brokers shop around to find the best loan program and interest rates for you. Because they don’t control the loan process directly, they don’t have control over the speed and process of the loan.

So, where do you find a good lender? Old fashion word of mouth is a great place to start. Ask your friends, family members, or colleagues for recommendations. They most likely had dealt with a lender recently. Ask them how they felt that transaction went. Did it close on time? Was it smooth? Was it easy to work with the lender? Would they recommend him or her? If not, why? There is valuable information to be gained by knowing what they didn’t like about that lender.

Your realtor is another great source for lender recommendations. They work with lenders on daily basis and they will have a list of trusted lenders they would be very happy to recommend.

A lender can make or break a deal and, besides your real estate broker, they are the person that you will spend the majority of your time dealing with them. So, take you time to find the right one, get pre-approved, and start your journey to find that perfect home.