Unless you have a close relationship with a banker we recommend you talk with a local mortgage broker. The reason it is important to deal with somebody local is that every real estate market is different. Lenders located in a different area or different state will have little to no local knowledge and contacts, which could make things more time consuming or difficult than necessary.
Sometimes transactions involving Internet lenders collapse in the final week because the lender did not do something required to get the transaction closed. Many Internet lenders quote fantastic rates and quick approvals, but sometimes have trouble approving and closing loans after a contract to purchase has been signed. If any issues come up during the transaction, it can be difficult to solve the issue without local knowledge and contacts with the lender. There is nothing worse than having gone through the process only to find an issue in the eleventh hour. This is why we suggest going with those lenders with local knowledge. This is not to say Internet lenders cannot be a viable option under the right circumstances, but we recommend you start local.
We work with several lenders and mortgage brokers on a regular basis. We only work with lenders who have a proven track record of treating our clients professionally and who are competitive with their rates and terms. We would not send our clients to someone that has substandard service or cannot perform as promised. In other words, we have an ongoing relationship based on their performance in the past. You are not obligated to use any of them but they are good first place to start. If you have someone in mind that you would like to use that’s great! Just let us know who to talk to and we’re happy to work with them. Who knows, we may recommend your lender to a future buyer if they meet our standards.
Our objective is to find out what you can afford, what closing costs may be required, the type of loan best suited to your situation, and to obtain the all important pre-approval letter that we will need for any offer we may write. Finding your upper limit also gives you peace of mind knowing the homes we look at will be within your budget. We also understand that even if you can afford more, it sometimes makes sense to set a self imposed limit lower than what you may be able to borrow from a lender. Even though you might obtain a pre-approval letter from a lender, it is still possible to shop rates and talk to other lenders after you find the right property.
When it comes to making an offer that is contingent on financing, having a lender approval letter from a local lender gives you the advantage of being the closest thing to a cash buyer as possible. This is another step beyond merely obtaining a pre-approval letter. You are giving the seller an assurance that if they commit to your offer and take their home off the market, the probability is very high a closing will occur. The approval will also spell out the terms of your loan which need to be incorporated into the offer we make. Terms can include interest rate, the type of loan, down payment, the amount of time the lender requires for approval and closing costs. These items are required to specify appropriate terms in the offer you make. That way you can be protected from unexpected changes. For instance, if rates were to jump before you lock in, you can build in the option to evaluate your decision to proceed.