Morning! Blue skies, whispy clouds - what could be more beautiful than a fall morning in Prescott, Arizona. Hello, I'm Gary Edelbrock, and we write quite a bit in our column about how to choose the right home. But, in some cases, that may be putting the cart before the horse. What we really need is to choose the right lender. Nancy and Brian Biggs are here to offer some tips in choosing the right lender.
How To Compare Lenders
Choosing a lender is like choosing a grocery store. Choosing a loan is like choosing a box of cereal. Every grocery store carries Cheerios, but how do you know if store A is more expensive than store B? Maybe store B is more expensive, but you like it anyway, because you know that the Cheerios will be fresh and you know that you will not have to wait in line for 15 minutes to check out. So, they carry Cheerios, but do they carry Frankenberry? How about Waffle Crisp? It's all cereal and sugar, but it's packaged differently and appeals to different people. How do you choose?
- The primary concern is whether the lender will be able to close the loan on time, and hopefully while all of your hair hasn't been pulled out of your head. The key to closing on time is the relationship between the loan originator (the person you interact with) and the underwriter (the decision maker). Ideally, you want this link as close as possible. Typically the smaller lenders will have close links and the major banks will have distant links. We have seen many cases where buyers are lured in by the loan originator and then are left at the mercy of some out of town underwriter who has 100 files and theirs is at the bottom of the pile. Be sure to ask who will be underwriting your loan and what the relationship is between the originator and the underwriter. Don't forget that you are a key influence in the process. If the lender asks you for documentation, then provide it as quickly as possible. If the lender sees that you are working diligently, then the lender will typically work diligently too. If you cannot be bothered to respond quickly, then the lender might put you on the back-burner. Don't be afraid to call for status.
- The secondary concern is cost. Some cereals have high sugar, some have high fiber, some have high nutrients, and some have a little bit of everything. Loans are the same way. Some have high interest and low upfront costs. Some have low interest and high upfront costs. Some have low interest now and high interest later. Given so much variety, it is difficult to compare loans with a single lender, never mind multiple lenders. Our advice is to pick two lenders and two loan types. Talk to a few different lenders and discuss which type of loan is the best for you. Pick two of those. Next, pick the two lenders that you feel most comfortable with. Now, comes the hard part. Ask each lender to outline the lender costs associated with each loan. Here's where it gets tricky. Some lenders forget certain costs, because they are paid up front, or they are paid outside of escrow. Some lenders will take a guess at title costs and some will overlook other costs, because they have nothing to do with the loan. To resolve these oversights, we have developed a comparison sheet that only allows the lender to estimate lender costs. All other closing costs are pre-determined. In this way, you can compare lender to lender and loan to loan without the other miscellaneous costs clouding the picture. You can download the comparison sheet at www.BiggsRealtors.com in the Buyer's section. Have your real estate agent calculate the fixed costs based on the two loans that you are interested in. Then provide each lender with the form to fill in. You can then compare the two loans and the two lenders and make an informed choice.
Nancy and Brian Biggs, Associate Brokers
Prudential Northern Arizona Real Estate
1177 Old Chisholm Trail
Dewey, AZ 86327
Nancy's Cell: 928-273-7113
Brian's Cell: 928-273-7112