Importance of Using Local Lenders
Simply put, using a lender from outside our local area to purchase your Charlotte home can cause you unforeseen problems on the way to closing. I have seen transactions fall apart and not close on time or at all because of complications getting documentation and loan approval that would have not otherwise happened to the buyer if they had dealt with a local mortgage specialist. And, yes, even after the borrower has worked closely with that lender to get “pre-qualed” and has made written application. It is always the things that happen after these where things can go wrong or get difficult… appraisal, documentation, disclosures to a few.
First, let’s get this out of the way… I do not, never have, and never will get a referral fee or any compensation from any lender or bank involved in a transaction with my buyer clients. I get paid by sellers of homes as their listing agent or to represent the buyers of their homes… period. My interest in this matter is clearly aligned with any buyers or borrowers interest that I represent: that the home under contract closes on time and with a minimum of complications to the buyer. And that I can reach the lender easily and help work through complications with my buyers when things do need addressing. Using competent local lenders is one good way to better assure that the loan process runs smoothly.
I refer local lenders not because a buddy works there or that they have called on me for so long. I only refer lenders who have demonstrated in my own professional practice that can consistently close loans on time, with a minimum of complications, and satisfy buyers needs for high levels of service with affordable rates and fees. If they have not done this consistently, I do not refer them.
Sometimes a client will want to use “their bank” in their own hometown to purchase property hundreds or thousands of miles away. Some large lending institutions with national or regional presence that includes our area can pull this off reasonably well. Even then, centralized underwriting, document processing, and appraiser selection will likely not happen locally and communication, the key to keeping things running smoothly, can be difficult. More importantly, it is mistakenly believed that the only differences in mortgage providers is in their rates and fees and that they all do the rest the exact same way and at the same pace because the process of getting a loan is “standard” and “regulated”… don’t you make this mistake, too.
Here are some reasons I argue for using a lender familiar with and located in the Charlotte area. Please consider these as you choose your financing provider:
- Probably the main reason a local lender consistently provides better service and is more accessible comes down to accountability… they live and work in the same market you are buying your home in, they want more business to come from me and other agents in the form of referrals because of their good work funding your transaction… they have their reputation to protect. They cannot run and hide behind the Internet like an online vendor can or be hundreds of miles away when it falls apart like a distant bank or broker can.
- Appraisals have become more complicated as how they are regulated has changed with the passage of the Home Valuation Code of Conduct (HVCC). I have seen appraisers sent by non-local lenders travel 50-100 miles outside of their normal work area to appraise buyer’s Charlotte homes because they were hired on a “low-price” basis and not because of their local market knowledge… and I have seen problems because of this. An appraiser sent by a lender not familiar with the area will hold up the transaction and/or not be able to appraise so another appraiser is sent. Deals can die this way.
- With the start of 2010 comes a new closing statement (HUD1) and major revisions on how lenders must disclose fees to buyers. How can a distant lender accurately gauge fees for your Charlotte area purchase in the areas on inspections, title search, title insurance, attorney fees… sometimes they cannot. Now if they miss by too much, re-disclosure requirements kick in and closing delays can follow.
- Distant lenders may not be familiar with our North Carolina purchase contract, its addenda, nor other customs related to the purchase. These can be areas for delays.
- Difficulty gaining access to decision makers when using lenders located outside the area can be a deal breaker. We as agents have relationships with our local lenders. It is such a waste not to be able to call on these folks for assistance. I find my hands are tied when my clients really need my help.
- Online lenders can be some of the worst offenders and poorest choices that buyers can make. Usually, their “lower rates” are bought-down points and fees, usually in the form of pre-paid interest, with your cash up front. And the loan package can show up with discrepancies from your original estimate… a problem that with the new changes WILL delay your closing, whether you are willing to pay those higher fees or not! Re-disclosure of fee differences can delay your closing by three days or more if they happen on the day of closing.
Consider your options carefully when choosing a home loan vendor for your purchase. They do not all perform the same and it is not all about the rate. For a good Charlotte area lender, check our Business Partners page under preferred lenders.