Good advice that buyers often hear is that they should shop around for the best mortgage.
Certainly, getting the best interest rate is important, even critically so. But just as important is choosing the right lender.
For example, any competent broker in Manhattan and elsewhere will counsel buyers to avoid out-of-town lenders. That because they can’t know the market, may be hard to reach at pivotal moments, tend to hire appraisers who are not in touch with the dynamics of local sales activity and probably cannot well evaluate an appraisal as worthy when it is submitted.
What prompts me to write about lenders again is a post that a friend of mine, Philip Faranda, recently published. A successful independent broker in Westchester County and a former loan officer, Phil described the notion of a best rate as mythology. Said he:
The factors that go into locking a mortgage rate include the down payment, credit rating, debt to income ratio, length of the loan, and a variety of other matters which makes quoting a prospective borrower a rate on the first meeting without a full application irresponsible at best. Published rates are based on assumptions that are so ideal that most borrowers either don’t qualify or must pay higher costs to achieve.
He goes on to point out that lenders “all operate in the same market for money.” The implication is that any variation consumers can obtain depends on the lenders’ profit margin. In other words, what you can do is negotiate, as Phil says, “within reason.”
You also want to ascertain whether your lender will be available when necessary; responsive to you and, if necessary, your broker or attorney; reduce junk fees; adhere to a timetable as closely as possible; and work closely with the loan underwriters to get you, the property and your loan committed and funded well in advance of the closing date–without seemingly quixotic changes or demands.
How can you pick a good lender? The best source may well be your real estate broker, whose experience with a variety of lenders will be up to date and broad.
Recent references for lenders are just as important as they are for every other professional on whom you may well depend.
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022