What to Expect When Working with a Lender

A Quick Breakdown of Mortgage Lenders

Working with a lender is an integral part of buying a home.  Whether you are coming at the transaction as the buyer or the agent, working with a mortgage broker helps make the whole process go a little bit easier—and here’s how.

You might wonder…what is a mortgage lender?  A lender’s job includes but is not limited to:

• Act as the middleman between potential buyers and lenders to find the best interest rates and terms for the buyer.
• Understanding lending institutions, rates, and terms; and having a knowledge of credit criteria and reporting.
• Doing the brunt of the legwork with the financial end of buying a home—including gathering documents, pulling credit histories, and verifying income and employment.
• Establishing relationships with favored lending institutions—a good broker will always look out of the best interest of the client.

When it comes to buying a home and choosing a lender and an agent, you may be stuck in a chicken and egg situation—which comes first??

Many people would likely argue that it’s best to first secure a lender, which makes complete sense on paper.  Meeting with a lender can ensure an accurate price point based on pre-approval. If you happen to be out looking at homes with an agent and find the perfect match early on, without a predetermined approval in place from a qualified lender, you as a buyer can’t make a move or put in an offer.  This would all be good reason to ensure you nail down a lender first and foremost—but truly, at the end of the day, finding a trustworthy and credible realtor first may be more to your benefit.

A good agent will be able to point a buyer in the best direction for their needs.  Realtors cannot receive incentive for referrals or working with specific lenders, so there is no worry about ulterior motives or backroom deals.  Buyers can rest easy knowing their best interest in always most important. A great agent will know which brokers will not only secure the best rates and fees but will also ensure they job is done quickly and precisely, pushing the loan and paperwork through seamlessly and without error.

You might be wondering, once you have lender referrals, what do you do with them?  What should you look for in a mortgage lender and why?  Many people make the mistake of basing their entire decision around rates and fees.  While those are obviously important factors to consider, focusing too much energy on negligible percentage points won’t make a huge impact at the end of the day.  The percentages most lenders are competing with will more often than not dwindle down to saving $300 on a $300,000 loan—which just isn’t worth the extra stress and trouble.  Instead, go with a lender who has a reputation for processing loans in a timely, efficient manner, with no errors. Pay attention to your agent’s demeanor around the lender and keep in mind lender referral is always earned and cannot be bought.  If your agent seems at ease and has a seemingly stress-free relationship with the lender, it’s a safe bet that they have a fairly seamless transaction history, and odds are using that lender will be equally as stress-free for you as the buyer. Trust your agent.  They will look out for your best interest in finding the right lender as much as they will in finding the right home.

Never negate the importance of quality first-person referrals.

Once a good team is in place, the lender and agent will come together to create synergetic efficiency.  Together, they will work to:

• Network
• Educate
• Market
• Service
• Refer

Focusing your energies on a lender with stellar word of mouth will all but ensure you’re homebuying process will go smoothly. Between a good agent and a quality lender, as a buyer you shouldn’t run into too many wrinkles that can’t be ironed out by the professionals you’ve hired—so trust your gut and trust your agent.