Real Estate Update

Ask Annette

Chose the right lender!

By Annette Sievert T he right (or wrong) lender can make or break the purchase of a property. Lots of buyers are looking for one thing and one thing only: low interest rates.

But there is so much more to closing a transaction and loan successfully and on time.

First, there is a difference between a mortgage lender and a mortgage broker. A lender lends their own money, a broker matches a buyer with a lender and their specific loan programs. That also means that there could be different requirements for different lenders and a broker is not free to make decisions, they will always need to adhere to what a specific lender wants.

A low rate will often mean higher fees or teaser rates. I have seen many transactions turn into a nightmare because of an obscure internet lender, luring people in with lowest rates, then coming up with weird requests and requirements, usually very late in the process, inevitably leading to delays or nasty surprises.

Here is a good example: A lender told a buyer their closing cost would be $7000. The buyer negotiated repair credits against those closing costs for $7000 in good faith. At the closing table it turned out the true closing costs were only $3000. The $4000 difference went back to the seller and there is nothing that could be done, especially last minute.

You want to work with a lender who has high integrity, is known in the community for closing their transactions on time and reliably with the terms agreed to in the beginning. You want a lender who will answer their phone on the weekend. That is when you most likely want to have your pre approval letter as you are looking for houses on Saturdays and Sundays. You want to work with a lender whose pre approval letters are worth their salt.

Here is another example: A buyer was moving from another state and started looking for houses in the $500000 range, armed with a preapproval from some lender in the state they moved from. Red flags went up when the buyer told the broker that they were looking for new jobs here while they were looking for houses and had already given notice at their former employment. You need to be employed and have income to get a loan... They were sent to an excellent local lender who looked at the situation, stating they could only buy for up to $265000 with the current numbers. Needless to say they decided to wait, get employment and ultimately bought the house they wanted. But just imagine if the real estate broker had relied on the existing pre approval letter, obviously not vetted well, and had gotten an accepted offer only to discover that the transaction was not viable, a catastrophe not only for the buyer but a huge disappointment and damage for the seller as well.

My father, a real estate developer in Germany, had a wise saying: “if you want to have the last drop from the bottle, the lid will hit your nose”

So look beyond the shiny teaser rates, don’t try to find the cheapest, try to find the best which will probably be cheaper in the long run and will make for a smooth transaction. Ask your local broker for recommendations and USE THEM!

Happy Buying

Annette

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Do you have a real estate question?

Ask Annette, at Coldwell Banker Valley Brokers in Corvallis 541-207-5551