Who you choose for a lender can literally make or break your real estate transaction. Here are the 3 types of lenders, plus the pros/cons of each one.
1. Big Banks
Big Banks are the ones you see on every street corner, grocery store, and ATM. These are the banks where you deposit your money, pay your bills, and cash your checks. The benefit to using a big bank is that they often have the best rates. However, these interest rates usually come at a cost. Big banks have a long way to go to improve their customer service experience, response times, organization, and speed. They also usually don’t work on nights and weekends. Expect to have multiple people touching your account, which means there’s no single point of contact when things go awry. These factors create slow response times and have the potential to create confusion during the transaction when buyers need clear answers and have hard deadlines. I’m dealing with one now and it has been a nightmare for both buyer and seller.
2. Online Lenders
Online lenders are the ones you see advertising at the top of Google when you start searching for a home loan. The benefit of using an online lender is that they usually have decent rates. In addition, they’re lightning fast when it comes to delivering pre-approvals. Speed is their appeal. But there’s a reason why they’re so fast…. Online lenders are like factories. They deal with cookie-cutter loans like a well-oiled machine, but if you need extra counseling or don’t fit neatly into their wheelhouse, they aren’t the best option for you. And they aren’t typically very good at communication during the process.
3. Direct Lenders
These are the ones that are a little harder to find; They’re usually local, familiar with our market, and work with a lot of local realtors. As a result, they have a very informative and balanced view of the best loan products for buyers and what it takes to get an offer accepted in this market. The benefit of working with a direct lender is that they take a consultative approach. They will sit down with you, go over all of the loan options available to you, and help you choose the right program that will be most beneficial to you and your unique situation. In addition, because they have a vested interest in closing your loan, they will typically make themselves available on nights and weekends – when you need them most. The only disadvantage of working with a direct lender is that they aren’t always the ones with the lowest rates. Sometimes, they are, but not always.
As an agent, I work with some fantastic lending partners. It’s important to start with a good lender who can help you determine your buying power and what programs are available. And I will also tell you that when I act as a listing agent, if I have multiple offers, I will always lean toward the buyer with a solid, local lender over one that has a preapproval from a big bank or online lender. Who you choose as your lender really does matter.
If you’re thinking about making a move (or know someone who is), I can help! Send me an email and let’s connect.