Using a Local Lender is a Smart Move in a Competitive Housing Market
I just had lunch with a realtor who told me one of her escrows was unraveling. Her buyer was working with an internet lender. I get it. We all want the best deal, and surfing the web for the “best rate” has become a National pastime. But when you’re looking for a loan to purchase a home, working with an internet lender may not be the best move.
If you live in a hot market like San Diego, you can expect there to be multiple offers and some tough negotiating. Using a local lender may help you in the following ways:
- A home loan from a local lender is more comforting to the seller. In fact, an offer from an internet lender could be turned down because the lender is considered “risky” or unresponsive.
- When you’re negotiating an offer on a home, lenders must be ready with multiple pre- approval letters to match your offer price. Lenders must act quickly or the seller may accept another offer in the interim. Local lenders know they are on call day and night when an offer is in the making. When time is of the essence, it’s important to know you can reach your lender quickly.
- Internet lenders don’t expect to do business with you again once your loan closes. There is no incentive for them to do a stellar job for you or your real estate agent. A local lender relies on repeat and referral business. They know their reputation and business is tied to how well they do their job. They also know they may run into you at the super market or the soccer field. They are your neighbors and they want to treat you right.
There is a time and a place for everything. When you already own a home and are refinancing, using an internet lender may work for you. But when time is of the essence, risking the home of your dreams to chase an elusive rate seems pennywise and pound foolish to me.
Helen Young is the Branch Manager of Choice Lending Corp’s San Diego office. She has more than 20 years of experience in mortgage lending. She obtained her Bachelor’s degree from San Diego State University in Business Administration and Accounting and is a Certified Public Accountant (CA inactive). She is a member of the San Diego Association of Realtors, Pacific Southwest Association of Realtors and the Women's Council of Realtors. She belongs to the San Diego Regional Chamber of Commerce and is a member of the California Society of Tax Consultants. She is also a CA Real Estate Broker.
* The information above should not be considered actual tax advice. Please consult a tax professional to discuss your specific tax benefits related to homeownership.