Everybody wants the best mortgage rate they can get, even when rising rates aren’t in the news. But with rates going up lately, people are desperate to find the best deal they can get.
Of course shopping for the best rate is a good thing to do, but more importantly, you should pay attention to whether or not that lender with a sweetheart rate is actually going to get you to the closing table!
It’s funny how lenders want to look at your credit history, your ability to keep a job, and your financial stability, but many home buyers don’t think too much about whether the lender is reliable and a good risk. And yes, the lender you choose to go with is a risk in any market, but all the more so lately…
Whether it’s because they hired too many people to keep up with demand over the past few years, poor management, or that they just can’t handle the market shift, many mortgage lenders are laying off lots of employees, if not entirely going out of business. This is leaving buyers in the lurch in the middle of buying a home, and sometimes just days before their closing.
Picture being totally qualified and going through the majority of the application and underwriting process. Then bam, a day or two before closing, your lender reveals they’re going belly up and won’t fund anymore loans. Or equally as tragic — the lender notifies you at the last minute they cannot lend on one of the condo projects in Mammoth Lakes because nightly rentals are allowed. This may sound like an exaggeration but it can and does happen.
There’s a simple solution: turn to your real estate agent for his or her advice and connections in the business. Go with a lender your agent trusts, can get on the phone, have open lines of communication with, and ultimately push for resolutions when there’s an issue. This is especially important in Mammoth Lakes as many lenders cannot loan on most condo projects because of the transient occupancy component. This link will take you to our current preferred providers.
And don’t be concerned that your agent is recommending someone because they get a piece of the action; there are laws in place to make sure agents aren’t recommending a lender for their own financial gain. The only thing your agent has to benefit from you using one of their recommended lenders is a successful closing!
That’s not to say you shouldn’t shop for the best rate possible. Just make sure you’re doing so with lenders that are solid and aren’t in danger of going out of business, or laying off employees to the point that it’ll affect your ability to get your loan in a timely manner, or at all. This is timeless advice, but all the more critical now when so many mortgage companies are either laying off employees or going out of business.
Many homebuyers are tempted to shop for the lowest mortgage rate and trust one who entices them with a tempting rate. Unfortunately, not only do they often switch the initial rate they quoted (or just stuff hidden fees in to make up for the lower rate), there’s always a chance the lender can’t get the loan closed. That’s especially possible now, with so many lenders laying off employees and some going out of business entirely.
While others may gamble with their home purchase, make sure you don’t roll the dice by going with a lender who may offer an enticing rate, but is otherwise a risky bet. Ask your real estate agent for his or her list of recommended lenders.
The lenders an agent tends to recommend are:
- Ones who’ve proven they’re reliable and get their clients’ loans approved and closed in a timely manner.
- Ones who’ll honor the rate and terms they quoted. (Not ones who offer a lower rate to get you hooked and then sneak in fees or a higher rate once you’re too far along to switch.)
- Ones who communicate with them and their clients, and are responsive when there are issues.
- Ones who offer competitive (if not the lowest) rates compared to other lenders.
Going with a lender your agent recommends could easily be worth more to you than any of the potential savings you may (or may not) get from another lender.