I know shopping for the best deal seems like the way to go and for most things, it is. I shop on Amazon and EBay for deals on things I buy all the time. However, when buying a home, shopping on line or choosing a discount broker may not be such a good idea.
Let me back up a bit and just say that I am not suggesting that shopping around for a good loan and lender isn’t important. BUT, I am saying that rate quotes and such aren’t always the best way to choose your lender. It seems that recently, the strength and credibility of your lender has become an important element in your offer package.
Today’s sellers are becoming weary of buyers with shaky loan per-approvals and are often asking that the buyer get per-approved with their own lender before submitting an offer. This often happens on a bank owned property from Wells Fargo, Bank Of America or one of the other major banks. And yes, part of the reasoning is that it gives them a chance to perhaps write the loan for the buyer and profit in that way. But this isn’t the primary reason.
Seller’s want to know that the buyer is solid. They don’t want to go 30, 60 or even 90 days into a contract while the buyer struggles to meet the conditions of their lender only to have the deal fall apart in the end and the home going back on the market.
What’s even more important in today’s market is positioning yourself as the best choice when you are in a multiple offer situation. Unlike a few years ago where the offer with the most money was the winner, today, the buyer with the stronger package is often the one who gets the home.
With the new rules on appraisals and lending regulations, it is not enough to offer the most money because a savvy home owner will know that the appraiser will often dictate the sale price anyway. Other factors of the offer are becoming important and the choice of lender is one of the most critical things that can affect the seller’s decision.
The lender’s I recommend are very competitive on their rates though often not the absolute lowest. If a buyer shops around the internet for cheap lenders they will likely find one that promises a better rate. The difference is, when you are buying a home, using a discount lender will often cost you your dream home when the seller chooses a different offer because he doesn’t trust your lender will be able to close the deal.
And there it is in a nut shell, a low rate on a loan from an unknown internet company or small time lender doesn’t help if you are in a competitive situation (Most good homes today have multiple offers) as the seller will often choose a buyer who is using a lender with a great track record.
Choose your lender wisely and make sure you are in a good position to win in a multiple offer situation is your best choice and having the peace of mind knowing in the end that your lender will be able to close the deal for you without putting your through the ringer during the loan process will help make the home buying experience less stressful.