How to Choose a Lender

Growing up, our parents taught us that having a relationship with "our bank" is critical to every major financial decision in our life, not the least of which would be buying a home. Sadly, those days are gone. Regardless of how long you have had a relationship with your bank, the new rules of banking apply to everyone.


Don't believe it:

• "My bank knows me. They will give me the best possible rates and service."
• "My bank will give me preferential treatment because they know me."
• "We already have one home loan with this bank. We won't have to give them much information to be approved for this loan. It will be straight forward, if not easy."
• "My bank is one of the largest banks in the country, and they own most of the paper on the back end anyway--I would rather that we just start with the bank where we are going to end when they sell my loan."

This last one is the biggest misconception today. But none of these myths are true in today's mortgage market. I am sorry to say that the rules of banking have changed so much during the past few years, and even more so since banks have been collapsing and consolidating these past 2 years. The truth is, your bank does not know you and does not have time to care about individuals. Yes, you may know the Vice President or President of your local branch, and they may say things to you like "What ever you need, just let me know." They may even be your next door neighbor, but none of this matters after you submit your loan to the processors and the underwriters. This is where knowing someone matters. And it is not you who needs to know the underwriters and processors and appraisers. It is your loan officers.

Big banks are consolidated. Loan officers are either in your local branch office, or they are on the phone somewhere. They are nice, and friendly. But the big banks make money by consolidating the real work of a loan to main offices. Typically on the East and West Coasts. These are the people who are making decisions on loans and directing the traffic for the process--not your local bank president. And not your loan officers. The words "I will do what ever I can to make this happen fast and painless" are meaningless words if the underwriter, appraiser and processors are not sitting in the same building, and have names that are known by the load officer.

Here is a test. Ask your loan officer what the names of the underwriter, appraiser and processor are for your account. If they tell you that they are in another office--run. You are in the wrong place. And by being in the wrong place, I mean you are risking the entire transaction by relying on a bank that does not know what happens, or who does what and when after you sign the loan documents. If they can not introduce you to the team in their office, you are in for the ride of your life. It is not a Disney ride. It is more like a Water Boarding Theme Park. Welcome to punishment, and no guarantees that you won't get a call 5 days before closing with these words on the other side "I did everything that I could, but we just found out that we can't approve you for this loan. I am very sorry." I hear it all the time from clients who are sure that I am wrong about today's banking industry.

So, who do you want to do your loan? A local Mortgage Banker. Not a bank. A Mortgage Banker. Not a Broker, though some mortgage brokers can do a good job as well, your best bets are a local Mortgage Banker. A person with a local presence, local office, local team. A person who can introduce you to their team in Austin. A person who has a portfolio of loans that are more than just FHA and Conventional loans. Hire a Mortgage Team that has a full portfolio of loans and options. Hire someone with experience.

If you are still unsure--call me, or ask your Realtor who they recommend and why. Choose your lender wisely.

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