After your real estate agent, your lender is the next most important teammate of your home-buying team.
Why is your lender so important? It is because they hold the money that will fund the purchase of your home. Most lenders are not trained and familiar with the contracts that are used between buyers and sellers. Therefore, if your agent is not in contact with your lender prior to getting into contract on a home, you could be at risk of losing your earnest money. Therefore, it is best to decide on a lender prior to formally starting the home search.
There are five questions to answer when interviewing a lender.
1. Are they local?
Having a local lender is crucial. This will give you the advantage of working with someone who is familiar with the local market and the specific nuances within the laws of Washington State. Online lenders may be based out of state and have different requirements for their loan. This can make your purchase more complicated and result in more hurdles to get over in an already stressful life event.
2. Can you meet them in person?
Meeting in person is huge. This allows you to make sure the lender is professional and that you get along with the person in charge of the originating the loan. It is also your opportunity to get all your questions answered while also making sure you are a good match and comfortable with them.
3. How available are they?
Nearly every aspect of a real estate purchase has a time stamp. Failing to live up to the timelines set forth in the contract can lose a buyer thousands of dollars. A lender is involved in one of the most important timelines in the purchase, closing. Closing Day is the day that the buyer officially pays the seller via their down payment and loan. Failure to get the seller the money can result in breach of contract. The loan officer must be available throughout the transaction to give comfort to the buyer that they are on track to close on time. Nothing is worse than coming up on a deadline and the person you are relying on is nowhere to be found.
4. Do they focus on home loans?
As mentioned before, making sure that the loan officer is familiar with home loans is key. Certain aspects of home loans are unique, having someone familiar with the process is a must.
5. What is their turnaround time and success rate? Do they do their own underwriting?
Making sure that they have a good turnaround time is a major factor in a competitive seller’s market. The quicker a buyer can get the seller their money, the more attractive the buyer’s offer is. Therefore, if a lender has a track record of closing within 30 or less at a very high success rate, they are likely a very reliable lender.
Think of underwriting as a final approval for a loan. The best and most efficient lenders have their own underwriters, meaning the do it in house. This allows the process to be much more streamlined and allows loans to processed and approved quicker. Other lenders/brokerages will broker the loan out to another company. That company will do the underwriting for them. This can cause issues in case there is a problem with getting an approval for the loan, and again, typically result in a slower loan approval.